With e-financial transactions reaching 90 per cent of pre-Covid-level, experts see rising volumes of ATM withdrawals in India. The average ticket size that indicates transaction withdrawal per person per month is also increasing by the day, observes Anurag Nigam, head (ATM managed services- India & Philippines), FIS, which is a Fortune-500 company and provides ATM technology solutions to banks. Nigam sees stability for e-transactions this fiscal and moderate growth in 2021-22 financial year.
“The average ticket size rose to Rs5,000 now from Rs2,400 level earlier. The direct beneficiary accounts initiated by the central and state governments helped in increasing number of bank accounts in rural areas as well. After Covid-19, there’s huge demand for electronic mode of payments and receipts. However, the options available to hug population in India are limited, but people find it very convenient,” said Nigam.
According to RBI data, the festive season further added to the increased volumes of digital transaction. On the other hand, cash transactions in the economy are also moving up. The Reserve Bank of India (RBI) data has revealed that notes in circulation stands at Rs26,56,476 crore as on September 25, 2020, which is nearly 23 percent higher than 2019, and 13 percent more from pre-Covid-19 level or March 2020, and nearly 45 percent higher than demonetization level.
In India, 66.6 billion transactions worth $270.7 billion may shift from cash to cards and digital payments by 2023 – and increase to $856.6 billion by 2030, according to a latest report by Accenture. The rapid move to digital payments has put additional pressure on banks, with three-quarters (75 per cent) of surveyed bank executives saying that the pandemic has increased the urgency of their plans to modernise payment systems. Accenture in the report ‘Playing the Long Game in Payments Modernisation,’ made a forecast that nearly 420 billion transactions worth $7 trillion, globally are expected to shift from cash to cards and digital payments by 2023 – and increase to $48 trillion by 2030.
The report by Accenture is based on a survey of 120 payments executives at banks globally regarding the transformation of their payments business, as banks make multi-year investments to compete with non-bank digital-payments providers and comply with new regulations. Accenutre carried out the survey during July-August 2020. It surveyed markets in India and other nations including Australia, Brazil, Canada, China, Norway, Singapore, Thailand, the UK and the US. It noted that the expected drop in cash volume is based on GlobalData and Accenture Research assumptions. Also, the forecast of non-cash transactions in consumer spending is calculated using cash evolution data and MSC rates provided by GlobalData. The delay in realization of card payments to merchants is hovering over 24 hours and sometimes it takes two days as well. “This is a discouraging factor. Digital transactions need to be sustained and for this, we suggest the government to provide more incentives to merchants and customers. India needs cyber protection laws. Customers in rural areas are not aware of how to lodge a complaint about fraud or any error committed by mistake in e-transactions,” remarked Nigam.
“I don’t see any rapid growth in e-transactions this fiscal, but forecast a moderate single digit growth for 2021-22 financial year. Of course, the ATM transactions segment will remain stable when compared to pre-Covid level. New debit cards issuance by banks, consolidation of banks result in rising number of ATM transactions. Amalgamation of banks will put pressure on number of ATM cards, but banking penetration will increase the number of ATMs in untapped areas in India. Consolidation of banks will provide more value to customers. Hence, FIS will play a key role in value addition to the banks,” further adds Nigam. According to a latest report by Accenture, about $271-billion consumer spending may shift from cash to cards, digital payments by 2023 in India. As many as 66.6 billion transactions worth $270.7 billion are expected to shift from cash to cards and digital payments by 2023 in India, and further increase to $856.6 billion by 2030, says Accenture in the report. This swift shift towards electronic mode of payments owing to the Covid-19 pandemic is creating need for banks to modernise their payment systems.
Banks didn’t expect such as rapid growth in digital payments as the unexpected demand created by Covid-19 pandemic as it’s transforming how consumers shop and pay for products as they prioritise convenience above all else. Sulabh Agarwal, head (payments practice globally), Accenture, said in the report that while banks’ investments in new payments systems have focused primarily on meeting compliance deadlines, the way they will drive value moving forward is by embracing the changing consumer dynamic and improving the customer experience. India is ahead of the curve in terms of real-time digital payments infrastructure driven by UPI and 24x7 NEFT, the pandemic has led to a further increase in digital, contactless payments as consumer behavior has undergone a shift, observes Sonali Kulkarni, Lead – Financial Services, Accenture in India. With newer players launching digital payment services through ‘Buy Now Pay Later’ schemes, the consumer experience and convenience will improve considerably. Banks in India have been investing in infrastructure to modernise their digital payments systems and it’ll boost the resilience of their digital payment operations.
The writer is a business journalist with 27 years of experience