Cash Is Still King Despite Digital Payments Gaining Traction In India: RBI Survey
A woman holds the loan she has received in the form of cash from a microfinance lender in Sadasivpet, India. (Photograph: Adeel Halim/Bloomberg)

Cash Is Still King Despite Digital Payments Gaining Traction In India: RBI Survey

Cash remained the most preferred mode of transactions even as digital payments gathered pace in a country of more than a billion people, according to a pilot survey by the Reserve Bank of India.

Of the 6,192 respondents interviewed by the central bank in Delhi, Mumbai, Kolkata, Chennai, Bengaluru and Guwahati, about 54% said they preferred to make cash payments, while close to half preferred receiving cash for regular expenses, the survey titled ‘Retail Payment Habits in India’ showed. Digital modes followed with about 41% opting it for making payments and 44% using it to receive money.

Cash, however, was preferred largely for small value transactions between Rs 100 and Rs 500, while for transactions between Rs 500 and above Rs 5,000, digital modes were opted.

According to the RBI, most respondents preferred cash due to a lack of internet and point-of-sale infrastructure, followed by the complexity of digital transactions, and their unfamiliarity with such payment systems.

The survey included respondents who were above 18 years of age, with 92% having an annual income of up to Rs 5 lakh and 81% with secondary and above education. Most of the respondents were below 45 years of age and 47% were from Mumbai and Delhi. The survey focussed on four aspects of digital payments — awareness, usage, risk perception and issues faced.

Cards: Most Preferred Digitally

Among digital payment modes, debit and credit cards were the most preferred, followed by net banking. Transactions made via mobile banking and Bharat Interface for Money — Unified Payments Interface — and prepaid wallets were relatively less preferred, the survey said.

Most participants cited ‘convenience’ as the most important reason for using of digital payments, with shopping, money transfer, payment of bills and mobile/TV recharges being the main purposes for doing digital transactions.

Even in terms of awareness, close to 94% respondents were aware of debit and credit cards, more than 70% were aware of internet and mobile banking, while just 49.5% were aware of BHIM UPI.

The student community, according to the survey, was the most aware of digital payments, while daily-wage earners and retired individuals were the least aware.

While the survey found that education and income levels, along with having a bank account, played an important role in awareness about digital payments, there was lack of awareness among some participants on basic safety norms to be followed for digital payment modes.

As close to 45% of the respondents had never changed passwords for their prepaid, debit or credit cards and mobile banking; and 22% changed them only when prompted by lenders. Around 8% of the participants also shared their passwords/PINs/OTPs used for digital payments.

“The survey found that there was a greater need for sensitisation among the public about basic safety norms while using digital modes of payment. The survey results also suggested that removal of certain infrastructure-related bottlenecks would help in enhancing the use of digital payments,” it said.

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