Between 2015-16 and 2019-20, digital payments have grown at a compounded annual growth rate of 55.1 per cent - from 593.61 crore in the year to March 2016 to 3,434.56 crore in the year to March 2020.

In absolute terms, value has grown from Rs 920.38 lakh crore to Rs 1,623.05 lakh crore during this period, clipping at an annual compounded rate of 15.2 per cent. Giving a year-wise data, in 2016-17 digital payments jumped to 969.12 crore from 593.61 crore in the previous year in volume terms, while in value the same rose to Rs 1,120.99 lakh crore.

Similarly, the numbers continued to scale new peaks with volume growing to 1,459.01 crore and value jumping to Rs 1,369.86 lakh crore in 2017-18. Come 2018-19, the numbers clipped at a faster pace with volume jumping to 2,343.40 crore transactions while the value rose to Rs 1,638.52 lakh crore.

However, FY20 saw a massive spike in volumes over the previous year to 3,434.56 crore but in value slipped down to Rs 1,623.05 lakh crore, which can be attributed to the steep fall in the overall economy and the massive job losses, forcing people to spend less and preserve more cash. Yet from a five-year growth perspective, the numbers shine with an annual growth rate of 55.1 per cent in terms of transaction volumes and 15.2 per cent in terms of value, show the RBI data.

Given the pandemic and the lockdown restrictions, digital payments volumes are set to jump manifold while the value could see a further plunge given the mammoth crisis that everyone faces following the pandemic. Digital payment push started almost a decade back with limited access to NEFT, RTGS and ECS payments. Later with the government push following the controversial note ban, digital payments rose sharply.

The development of UPI-based payments as well as app-based payments just pushed the boundaries and has since witnessed blossoming of a myriad of payment systems, entry of non-bank players, and a gradual shift in the customer behaviour from cash to digital payments. Behind all these, the Reserve Bank has played the crucial role of an operator, catalyst and facilitator, regulator and supervisor, as the occasion demanded towards achieving its public policy objective of developing and promoting a safe, secure, sound and efficient payment systems. Some of the initiatives introduced decades ago in payment systems to safeguard the interests of customers are valid even today. 

Some of the recent RBI initiatives for enhancing security and increase customer confidence in digital payments include mandating use of only EMV chip and PIN-based debit and credit cards from January 2019; tokenisation from January 2019, when RBI issued a framework for tokenisation of card transactions which allowed all authorised card networks to offer tokenisation services, irrespective of the app provider, use case; facility to switch on/off transaction rights; mandatory positive confirmation to remove any ambiguity for funds transferred through NEFT and RTGS from March 2010, and January 2019, respectively. 

Another innovation has been contactless cards which allows cardholders to “tap and go”; mandatory data storage within the country; harmonisation of turnaround time for failed transactions from September 2019 and setting up of a digital ombudsman and also institution of the Central Payment Frauds Information Registry among others. 

One of the biggest outcomes of these measures is the massive change in the behavioural trends of customers–-for instance, as percent of card usage, they are being used increasingly for payments--from 20 per cent in FY16 to 45 per cent in FY20, with debit card turnover outpacing credit card values.