I am a big fan of The Hindu Business Line and one of their recent reports shows a big shift in India to digital payments – the cash economy, so long a burden for India, is dying out as a result of Covid and long-term Modi Government efforts.
This has massive positive implications for GST income for government.
Business Line reported that ACI Worldwide released a new report that indicated more than 70.3 billion real-time payments transactions were processed globally in 2020, a surge of 41 per cent compared to the previous year.
This comes as the Covid-19 pandemic dramatically accelerated trends away from cash and cheques towards greater reliance on real-time and digital payments, according to the study.
According to the report, India retained the top spot with 25.5 billion real-time payments transactions, followed by China with 15.7 bn transactions.
In 2020, the transaction volume share in India stood at 15.6 per cent and 22.9 per cent for instant payments and other electronic payments respectively, while paper-based payments had a considerable share of 61.4 per cent.
The report speculated that by 2024 the share of real-time payments volume in overall electronic transactions will exceed 50 per cent. This will further touch 71.7 per cent by 2025.
“India’s journey of creating a digital financial infrastructure has been characterized by collaboration between the government, the regulator, banks, and fintech. This has helped to advance the country’s goal of enabling financial inclusion and also provided rapid payment digitization for citizens. The pandemic has further accelerated the adoption of digital payments with many first-time users adopting digital payments and significant uplift by merchants,” said Kaushik Roy, VP, and head of product management, Asia, ME, and Africa, ACI Worldwide.