Digital financial transactions witnessed a significant surge in India in March 2020, as the nation went into lockdown due to the Covid-19 pandemic, according to data from the Reserve Bank of India (RBI). The number and value of transactions through various digital channels, including Real Time Gross Settlement (RTGS), the Unified Payments Interface (UPI), Bharat Bill Pay, and others, showcased remarkable growth, even while ATM withdrawals and card usage declined.
Swift Rise in RTGS & UPI Transactions
The total value of Real Time Gross Settlement (RTGS) transactions, RBI’s largest online payment method, surged by 34% across banks in March 2020. Meanwhile, the National Payments Corporation of India (NPCI) administered Unified Payments Interface (UPI) saw over 125 crore transactions within the same timeframe. There was, however, a slight decrease compared to February’s numbers due to economic stagnation during the lockdown. Most transaction volumes were contributed by recharges, bill payments, and retail banking operations.
Beneficial Growth of Bharat Bill Pay
NPCI-managed platform, Bharat Bill Pay, observed an increase in transactions from 1.49 crores to 1.58 crores between February and March. This platform allows customers across the nation to execute bill payments anytime, anywhere, ensuring reliable and safe transactions.
Decline in Cash-based Transactions
Interestingly, despite the growth of digital transactions, cash and other cash-based services experienced a decline during this period. This can be attributed to reduced requirements for cash as spending became primarily confined to essential and necessary items amid COVID-19.
Downfall in Aadhaar Enabled Payment System (AePS)
The government’s Aadhaar Enabled Payment System (AePS) also displayed a decline of 16.1% in transaction numbers in March. The government primarily uses AePS for direct benefit transfer schemes, enabling users to complete financial transactions on Micro-ATMs using their Aadhaar number and biometric verification.
Insights on RTGS
RTGS is a funds transfer method that instantly sends money without any delay. It is not a 24×7 service and only operates during bank working hours. The minimum amount one can send via RTGS is Rs2 lakh with no set upper limit.
Understanding UPI
Unified Payments Interface (UPI) is an advanced version of Immediate Payment Service (IMPS), allowing round-the-clock fund transfers. Launched by NPCI with 21 member banks in 2016, UPI integrates multiple banking features, seamless fund routing, and merchant payments into one application.
About AePS
AePS, developed by NPCI, allows individuals to conduct financial transactions on Micro-ATMs using just their Aadhaar number and biometric verification, enhancing transaction security by eliminating the need to provide bank details.
NPCI – An Overview
National Payments Corporation of India (NPCI) is the umbrella organization for all retail payment systems in India. Established with RBI and Indian Banks’ Association’s support and guidance, NPCI aims to consolidate and integrate multiple existing systems into a standardized nationwide retail payment process. This facilitates an affordable payment mechanism for all, promoting financial inclusion across India.
