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Rise in Digital Transactions

  • 20 Apr 2020
  • 5 min read

Why in News

According to the recent Reserve Bank of India (RBI) data, the month of March 2020 (when Covid-19 lockdown began) saw a sharp rise in digital financial transactions countrywide.

Key Points

  • The total value of Real Time Gross Settlement (RTGS) transactions rose by 34% across banks.
    • It is the biggest online payment method offered by RBI.
  • The National Payments Corporation of India (NPCI)-run Unified Payments Interface (UPI), registered more than 125 crore transactions in March.
    • The numbers, however, dipped slightly compared to February as there was a dip in economic activity due to lockdown.
  • Recharges and bill payments as well as retail banking transactions, accounted for the majority of the volume of all the transactions.
    • NPCI-run Bharat Bill Pay was one of the beneficiaries, as it recorded 1.58 crore transactions in March as against 1.49 crore in February.
  • According to the data, the usage of cash and other cash-based services dipped during the period.
    • Cash withdrawals from ATMs as well as usage of various cards (debit, credit) have also gone down significantly.
    • This could be because people’s requirements for cash have fallen since the spending is mainly on essentials and necessities.
  • The government’s Aadhaar Enabled Payment System (AePS) also saw a decline of 16.1 % in the number of transactions, in March.
    • The government uses AePS mostly for direct benefit transfer schemes.

Real Time Gross Settlement 

  • RTGS is an electronic fund transfer method through which money is sent on a ‘real time’ basis without any delays.
  • RTGS allows the money sent by the remitter to immediately reach the beneficiary as and when the money transfer transaction is initiated.
  • ‘Gross Settlement’ refers to the processing of transactions on an individual basis and not in a batch wise system.
  • Minimum amount that can be sent via RTGS mode is Rs.2 lakh and has no maximum limit.
  • RTGS is not a 24x7 facility and is available only during working hours of banks.

Unified Payments Interface 

  • It is an advanced version of Immediate Payment Service (IMPS)- round–the-clock funds transfer service to make cashless payments faster, easier and smoother.
  • UPI is a system that powers multiple bank accounts into a single mobile application (of any participating bank), merging several banking features, seamless fund routing & merchant payments into one hood.
  • National Payments Corporation of India (NPCI) launched UPI with 21 member banks in 2016.

Bharat Bill Payment System

  • The Bharat bill payment system is driven by National Payments Corporation of India (NPCI).
  • It is a one-stop ecosystem for payment of all bills providing an interoperable and accessible “Anytime Anywhere” bill payment service to all customers across India with certainty, reliability and safety of transactions.

Aadhaar enabled Payment System 

  • AePS is developed by the National Payments Corporation of India (NPCI) that allows people to carry out financial transactions on a Micro-ATM by furnishing just their Aadhaar number and verifying it with the help of their fingerprint/iris scan.
  • With the help of this payment system, funds can be transferred from one bank account to another simply through their Aadhaar numbers.
  • This system adds another layer of security to financial transactions as bank details would no longer be required to be furnished while carrying out these transactions.

National Payments Corporation of India

  • NPCI is an umbrella organization for all retail payments systems in India.
  • It was set up with the guidance and support of the Reserve Bank of India (RBI) and Indian Banks’ Association (IBA).
  • NPCI was established with following objectives -
    • To consolidate and integrate the existing multiple systems into a nation-wide uniform and standard business process for all retail payment systems.
    • To facilitate an affordable payment mechanism to benefit the common man across the country and propel financial inclusion.

Source: IE

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