data | India is moving from wallets to digital wallets

RBI’s newly launched index shows that digital payments have grown significantly in India especially during the pandemic

RBI’s newly launched index shows that digital payments have grown significantly in India especially during the pandemic

The pandemic has accelerated India’s transition to a digital economy. From over 70% of point-of-sale (PoS) transactions involving cash in 2019, the share has almost halved to 37% in 2021. Notably, the share of digital wallets in the mix has improved dramatically from just 5% of PoS payments to 25% over the same period. Only China appears to be emulating this phenomenal surge in wallet payments. RBI’s newly launched Digital Payments Index also shows that digital payments have increased significantly in India, especially during the pandemic. However, cash in circulation as a percentage of GDP in India has exceeded pre-demonetization levels and is the highest among the economies compared

wallets preferred

The chart shows the percentage of point-of-sale payments made using different modes. The share of cash fell from over 70% to 37% between 2019 and 2021. During the same period, the share of wallets increased from 5% to 25%

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India vs others

The chart extends Chart 1 to include selected economies. Credit and debit cards in PoS transactions are still the preferred methods in most countries, while India and China stand out for their preference for digital wallets

Digital payments on the rise

The graphic shows the RBI Digital Payment Index, which measures the degree of digitization of payment transactions in India. The chart shows that digital payments grew by over 200% between 2018 and 2021

spikes in cash flow

The chart shows the ratio of currency in circulation to GDP of selected economies. While digital payments have increased in most economies, post-pandemic cash in circulation has increased significantly. In India in particular, the rate peaked in 2020 and was the highest among the economies compared

Source: Bank for International Settlements, FIS Worldpay

Also read: The other digital divide

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