RBI Releases New Index To Measure Digital Payments Growth In India
The Reserve Bank of India released a Digital Payments Index to measure the growth in cashless transactions in India.
The index comprises five broad parameters with varying weights to measure the penetration of digital payments, the central bank said in a statement on Friday. The five key parameters include:
- Payment enablers (25%).
- Payment infrastructure—demand-side factors (10%).
- Payment infrastructure—supply-side factors (15%).
- Payment performance (45%).
- Consumer centricity (5%).
These factors include multiple sub-parameters that would help the regulator conduct its study into the digital payment ecosystem.
Payment enablers comprises multiple channels through which digital payments can be accessed. This includes the internet, mobile, Aadhaar, bank accounts, merchants, and participants. The sub-parameters for payment infrastructure include credit cards, debit cards, prepaid payment instruments, point of sale terminals, automated teller machines, quick response codes, among others.
Under payment performance, which carries the highest weight in the index, the regulator would measure factors such as the volume and value of digital payments, unique users, paper clearing, currency in circulation and cash withdrawals. For customer centricity, the RBI would consider customer education and awareness, frauds, complaints, declines and system downtime.
At a base of 100 for March 2018, the RBI has measured that the index rose to 153.47 and 207.84 in March 2019 and 2020, respectively. Going forward, the index shall be published on RBI’s website on a semi-annual basis from March 2021 with a lag of four months, the regulator said.
Digital payments in India have seen a rapid rise in adoption and development in the last four years. The decision to outlaw old Rs 500 and Rs 1,000 notes in November 2016 forced customers to switch to digital payments. The unified payments infrastructure was also launched in the same year and it soon became one of the most popular payment platforms.
In December, UPI reported 223 crore transactions worth Rs 4.16 lakh crore compared with 221 crore transactions worth Rs 3.9 lakh crore in November.