India sees 100 million e-payments daily

BENGALURU: India is currently seeing 100 million digital transactions daily worth about Rs 5 lakh crore, according to RBI chief GM P Vasudevan. The numbers indicate that e-payments are well on their recovery path to pre-Covid levels. Before the lockdown, the daily digital transaction volume was around 120 million, Vasudevan said at an event — the Global Fintech Festival, an event attended by top payments sector executives and regulators.


“Last year, around this time, daily transaction volumes were 80-85 million. If we go to June 2016, it was only 22 million. So, in the last five years, we have seen significant growth in digital payments at a CAGR of 58% in volume and 15% in value terms,” Vasudevan said.

During the discussion, National Payments Corporation of India (

NPCI

) MD & CEO

Dilip Asbe

said digital transactions can easily reach 1 billion daily volumes by 2025, based on the current growth outlook. “We will definitely do 1 billion daily digital transactions. I don’t have any doubt in my mind,” said Asbe, who has been driving the Unified Payments Interface (UPI) network, which clocked over 1.3 billion transactions last month, surpassing pre-Covid volumes of February.

While the future growth potential of digital payments was echoed by all, multiple sessions during the event saw industry executives raising the need to bring the merchant discount rate (MDR) back in the ecosystem in some form. Earlier in the year, the government made MDR, a fee to enable digital payments, zero and this move did not find any favour in the ecosystem.

“I do believe the government will reconsider the reasonable MDR to come back. That’s important,” said Asbe. According to him, $500 million to $1 billion of cost is borne by the merchant-acquiring ecosystem on an annual basis to “sustain the digital payment infrastructure, including manpower, servicing and typical (such) assets”.

In another session,

Amitabh Kant

, CEO of NITI Aayog, a think tank of the government, talking to PhonePe co-founder Sameer Nigam, said the payments industry should tell the government on solving the issue of zero MDR. This is the first time a senior government official has publicly spoken on the matter. “If you tell us, we will take up the issue at the right place. The solution need not be binary (bringing back old-rate of MDR or no MDR),” he said.