Digital payment

Digital money is making the world go round

Digital payments in various forms are on the rise amid preference for contactless transactions. Focus now is on expanding infrastructure and increase coverage

Consumers all over the country have been embracing digital payments like never before. With COVID-19, contactless and cashless transactions have become the preferred choice among consumers and merchants alike.

While consumers are ordering groceries and paying utility bills through e-commerce modes from home, retail and online merchants are deploying multiple frictionless and asset-light solutions.

The European leader in the payments and transactional services, Worldline, which analysed Indian digital transactions available in public databases as well as transactions processed by themselves in (July-September) Q3 2020, corroborated that and showed several payment products witnessed V-shaped recoveries during that period.

“The Reserve Bank of India has announced several initiatives to enhance the digital payments space in India; the opening of the first cohort under the regulatory sandbox with ‘retail payments’ as its theme, setting up of a self-regulatory organisation for payment system operators, streamlining QR code infrastructure and setting up of the Reserve Bank Innovation Hub among others.

These initiatives are being welcomed by industry players as they are expected to leverage technology, spur innovation, enhance system efficiency and strengthen the acceptance infrastructure,” said Deepak Chandnani, MD, Worldline South Asia & Middle East.

Now, for digital payments to increase in a sustainable way, merchants across the country need to have the infrastructure to accept all payment instruments. But the Points of Sale (PoS) infrastructures in India still are concentrated in the larger cities only – largely because of cost issues related to both logistics as well as low usage by merchants outside such cities. A Payment Infrastructure Development Fund (PIDF) could break that barrier down.

On June 5, 2020, the RBI announced the creation of a PIDF to encourage acquirers to deploy PoS infrastructure (both physical and digital modes) in underserved areas such as tier-3 to tier-6 centers and the northeastern states. The size of the fund is to be Rs 5 billion with the RBI putting in half and the other half to come from the card schemes and card issuers.

There is optimism that this fund could provide that much-needed fillip to the PoS infrastructure in the country. Citing a similar instance, Sunil Rongala, VP-Strategy, Innovation and Analytics, Worldline, explains, “To understand the potential impact a fund like this can make, we need to look at Malaysia where a Market Development Fund was introduced in 2014 with the primary aim of increasing the number of PoS terminals in the country – the goal set was to reach 800,000 terminals in 2020 from 233,000 in 2014.

By most measures, this seems to be a success; the number of PoS terminals reached 407 K in 2017 and 669,000 in 2019 with a full expectation of reaching the target in 2020. The success is also reflected in the number of per capita e-payment transactions made; it is up from 49 in 2011 to 111 in 2017 and 144 in 2019.”

Malaysia, of course, is far smaller compared to India and its population is about 33 million compared to 1.3 billion in India. It is also worth noting that the Malaysian fund was expected to channel RMB 455 million (Rs 8.25 billion) which is significantly higher than the fund announced in India, he added.

Here are some unique digital payment-related insights derived by Worldline.

Merchant acquisition

In Q3 2020, there were over 5.18 million PoS terminals deployed by merchant acquiring banks, up 13% as compared with Q3 of the previous year. There was a mild dip in the number from March 2020 but in September 2020, it crossed the March number of 5.13 million.

Overall transactions at physical touchpoints in Q3 2020 were up by 40% in volume and 51% in value as compared with Q2 2020. For Worldline India, at physical touchpoints, groceries, petrol stations, clothing and apparel, specialty retail, pharmacy, and medical, restaurants, and departmental stores together accounted for 65% in terms of volume and 55% in value in Q3 2020.

In the online space, e-commerce (shopping for goods and services) and the education sector contributed to

over 65% in terms of volume and value in Q3 2020. An observed trend is that the travel and hospitality sector is witnessing growth with each passing quarter.

Card issuance

Interestingly, debit card issuance has been on the rise since the beginning of the year. While over 13 million debit cards were added to the system in Q3, the number of outstanding credit cards grew by over 1 million in the same quarter. As of September 2020, there were 865.43 million debit cards and 58.69 million credit cards in the country.

The increase in debit card issuance can be attributed to a significant number of new accounts opened under the Pradhan Mantri Jan DhanYojana (PMJDY) scheme. About 5.68 million RuPay cards were issued to PMJDY beneficiaries via banks under the scheme in Q3 2020. Replacement of magnetic stripe cards with EMV chip cards to existing customers, upgrade to contactless cards, pent-up demand for card issuance post lockdown, and business as usual could be other reasons for this rise.

Debit card transactions volume and value in Q3 2020 were 1.03 billion and Rs 2.13 trillion respectively. Debit card transactions volume in Q3 increased by 20% and 4% at POS and e-commerce respectively. In terms of value, debit cards recorded 18% and 10% at POS and e-commerce respectively in Q3.

Credit card transactions volume and value in Q3 2020 were 423.15 million and Rs 1.47 trillion respectively. Transactions volume of credit cards in Q3 increased by 19% and 8% at POS and e-commerce respectively. In terms of value, credit cards recorded a growth of 9% and 15% at POS and e-commerce respectively in Q3.

Prepaid payment instruments

The number of prepaid payment instruments has been growing at a steady pace since the beginning of 2020. As of September 2020, there were 1.9 billion prepaid payment instruments in the country, of which, 167.24 million were prepaid cards and 1.82 billion were mobile wallets.

Prepaid card transactions volume and value in Q3 2020 were 275.60 million and Rs 98.64 billion respectively. Prepaid cards, which are primarily used for online transactions rather than physical merchant places, recorded 15% growth, while the number of mobile wallets saw an uptick of 4% in Q3 over Q2. However, the value of transactions is 33% lower compared with the same period of the previous year though there is a recovery happening from the low seen in April 2020.


Transactions through mobile wallets are also growing steadily. The number of transactions through them in Q3 2020 was 727.91 million and the value was Rs 391.05 billion. This includes the purchase of goods and services and fund transfer through wallets. In Q3 2020, it recorded a 4% increase in volume over Q3 of 2019.

However, the value of transactions is 33% lower compared with the same period of the previous year though there is a recovery happening from the low seen in April 2020.

Other payment channels

In Q3 2020, 5.77 billion mobile app-based transactions were recorded while net-banking/internet-browser-based transactions were over 814.71 million. It is evident from the data that consumers prefer mobile apps frequently for small transactions and net-banking/browser-based channels for high-ticket transactions.


Mobile app-based transactions recorded 37% growth while net-banking/internet-based transactions witnessed over 35% increase against the previous quarter. The value of mobile app-based transactions grew by 38% while net-banking /internet-based transactions grew by 23.52%.

Unified Payment Interface

In Q3, 2020, UPI recorded an 82% increase in volume and a 99% increase in value as compared with Q3 of 2019. In September 2020, UPI clocked over 1.8 billion transactions in volume and breached Rs 3 trillion in terms of value. In Q3 2020, transactions via Immediate Payment Service (IMPS) recorded 747.83 million transactions volume and Rs 7.09 billion. It grew by 26% in terms of volume and 5% in terms of value as compared with Q3 2019.

Nineteen banks joined the UPI ecosystem in Q3 2020 bringing the total number of banks providing UPI services to 174 as of September 2020 while the BHIM app from the National Payments Corporation of India (NPCI) was available for customers of 146 banks. The number of BHIM app downloads stood over 158 million as of October 13, 2020.

NPCI has taken some initiatives like the creation of secondary/backup UPI ID to improve customer experience, guidelines on the usage of UPI APIs, merchant system enhancements, and introduction of B2B as a separate category among others in the recent past. NPCI has recently given approval also to WhatsApp to go live with UPI in a graded manner, starting with a maximum registered user base of 20 million.

It has issued a cap of 30% of the total volume of transactions processed in UPI, applicable on all Third-Party App Providers (TPAPs) effective from 1 January 2021. However, the existing TPAPs processing over 30% of transactions will get a period of two years from January 2021, to comply with the norms.

In other developments, UPI auto-pay functionality was introduced for recurring payments. NPCI also launched NPCI International Payments Limited (NIPL), its wholly-owned subsidiary firm with a primary focus to internationalise UPI and RuPay.

National Electronic Toll Collection

NETC transactions in Q3 2020 stood at 293.53 million, an increase of 84% over Q3 2019, and its value of transactions was Rs 29.01 billion, an increase of 181% during the same period of the previous year. As of September 2020, 19.40 million Fastags were issued since the inception of the NETC program, and about 2 million tags were issued in Q3 2020.

The Union Ministry of Road Transport and Highways has taken several measures to make Fastags mandatory. Fastag has been made mandatory for four-wheelers from January 1, 2021. Moreover, Fastag has been made mandatory for new third-party insurance with effect from April 2021 and even the renewal of the fitness certificate will be done only after the fitment of Fastag for transport vehicles.

NPCI is enhancing NETC enabled use cases like contactless and interoperable parking solutions in major cities.

Bharat Billpay

Transaction volume and value of Bharat Billpay reached all-time high figures in September. The transaction volume passing through Bharat Bill Payment Central Unit (BBPCU) in Q3 2020 stood at 64.56 million while the transaction value was Rs 114.10 billion. It registered a growth rate of 103% and 109% in volume and value respectively against Q3 2019.

Bharat Bill Payment System added about 927 billers in Q3 bringing the total number of billers to 1,172 as of September 2020. There are around 15 biller categories live which includes major recurring payment categories like loan repayments, insurance, education, housing societies, Fastag recharge, cable TV subscription, and hospitals.

Bharat Billpay allows customers to pay their bills anywhere and anytime through multiple channels such as internet banking, mobile banking/app, website, agents, business correspondents (BCs), and branches using multiple modes such as cards (credit, debit, and prepaid), NEFT, net banking, UPI, account transfer, and e-wallets.

Aadhaar-enabled payment service

AePS transactions – ONUS, OFFUS, DEMO AUTH, and eKYC – recorded a substantial volume of over one billion transactions in Q3 2020, registering about 58% growth over Q3 2019. It processed transactions worth Rs 548.93 billion, an increase of 92% over Q3 2019. AePS transactions volume and value has grown by 74% and 71% respectively as compared to the quarter ending March 2020.

It facilitated government direct benefit transfers (DBT) to beneficiaries during the quarter and several banks provided services at the customer’s doorstep through BCs.

RBI’s initiatives are welcomed as they are expected to leverage technology, spur innovation, enhance system efficiency and strengthen acceptance infrastructure.”

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