The pandemic has accelerated India’s transition to a digital economy. From over 70% of point-of-sale (PoS) transactions done using cash in 2019, the share almost halved to 37% in 2021. Notably, the share of digital wallets in the mix has improved drastically from just 5% of PoS payments to 25% in the same period. Only China seems to be mimicking this phenomenal rise in wallet payments. The RBI’s newly introduced digital payments index also shows that digital payments surged in India, especially during the pandemic. However, the currency in circulation as a % of the GDP has crossed pre-demonetisation levels in India and is the highest among the economies compared
Wallets preferred
The chart shows the % share of point-of-sale payments done using different modes. The share of cash dropped from over 70% to 37% between 2019 and 2021. In the same period, the share of wallets increased from 5% to 25%
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India vs others
The chart expands chart 1 for select economies. Credit cards and debit cards in PoS transactions are still the preferred modes in most countries, while India and China stand out for their preference for digital wallets
Digital payments on the rise
The chart shows the RBI’s digital payment index which measures the extent of digitisation of payments in India. The chart shows that digital payments have increased by over 200% between 2018 and 2021
Cash circulation peaks
The chart shows the cash in circulation to GDP ratio among select economies. While digital payments have increased in most economies, cash circulation has risen significantly after the pandemic. In India especially, the ratio peaked in 2020 and was the highest among the economies compared
Source: Bank for International Settlements, FIS Worldpay
Also read: The other digital divide
Published - March 21, 2022 10:26 pm IST
