BENGALURU: India’s digital payments and ATM withdrawals both plunged during the April-May period of 2021, with the second Covid wave and resulting lockdowns removing much of the demand from the economy. Digital payment channels in May, except UPI, saw a 30-40 per cent decline in value compared to March, while ATM cash withdrawals dropped by 64 per cent.
The United Payments Interface (UPI), which has witnessed massive adoption after the onset of the pandemic, saw a marginal decline of 2-2.5 per cent in May 2021 compared to the Rs 5.04 lakh crore value transacted through the channel in March 2021. In terms of volume, UPI stood at 2.53 billion monthly transactions in May, down from 2.73 billion during March 2021.
During FY21, digital payments had witnessed a 13.4 per cent y-o-y drop in value terms, according to the RBI’s Annual Report for FY21, led by lower growth in Real Time Gross Settlement (RTGS) system and a decrease in transactions of paper-based instruments. The RBI said that the decline in value of RTGS transactions is largely attributable to subdued economic activity.
The impact of second wave on RTGS, usually used as a payment system by large firms for large transactions, was more pronounced with transactions value declining by 35 per cent in May 2020 from March 2020, Rs 83.6 lakh crore. The volume of RTGS payments was down to 12.3 million in May from 20.2 million in March.
National Electronics Funds Transfer transactions (NEFT) fell by 40 per cent in value to Rs 18.19 lakh crore while in terms of volume, they dropped from 348 million (March) to 256.3 million (May).
The contraction in credit and debit cards transactions during the period in value terms be 25 and 35 per cent respectively.
For ATM cash withdrawals, the contraction was as much as by 64 per cent. The number of cash withdrawals also witnessed a slump to 2.5 billion in May from 3.5 billion in March 2021. However, the Aadhar enabled Payments System saw withdrawals increase from 750 million (March) to 824 million (May) although value fell 88%.