Digital payments triggered by demonetisation have declined: Report

Though the govt's move to take out 86% of the cash on November 8, 2016 gave an instant surge to digital payments in the months of November and December, the momentum has waned and the volume and value of digital transactions have stagnated, financial services firm Motilal Oswal observed in its recent report.

The co observed that the aggregate value of all transactions under electronic payment systems failed to witness significant increase even six months post demonetisation, while cash withdrawals from ATMs have moved back to pre-demonetisation levels.

“All these data points raise doubts over the desired structural shift towards digital payments post demonetisation,“ Motilal Oswal said in its report Ecosope ­ The Economy Observer.

The report cites RBI data to show that the value of transactions in retail payments, including through card swiping at PoS terminals, wallets and other prepaid payment instruments (PPIs), IMPS and the unified payment interface (UPI) increased sharply in December 2016, but has now stabilised, though at higher levels. The volume of these retail digital transactions also doubled by December 2016, but there were no new net additions since then.