The global pandemic Covid-19 is forcing Indians to resort to digital payment platforms when settling bills as well as paying for
groceries.
Before the Covid-19 outbreak, Indian citizens largely ignored a 2016
government decree that attempted to achieve the same, reports The
Economic Times of India.
The news site reports
that the value of transactions on the Unified Payments Interface, a
platform created by India’s largest banks in 2016, reached an all-time
high in June.
As the country’s infection rate and deaths
associated with Covid-19 grew, Indians began switching to digital
payment options “as people feared to handle banknotes” amid the
pandemic.
Electronic fund transfers from banks, which had dropped
in April as economic activity slowed, have seen a rebound. The Indian
news site refers to a recent survey by Capgemini Research Institute
observed a growing appetite for digital payments.
According to this survey:
Three-quarters
of Indian consumers reported greater use of digital payments since the
virus outbreak, and 78% expect to continue increasing their use in the
next six months — the highest figures among 11 nations surveyed.
Increasing
digital payment volumes are a fulfillment of Prime Minister Narendra
Modi’s vision of increased use of digital financial technologies.
In
November 2016, India suddenly invalidated most of the country’s
high-value currency notes. The twin objective of the demonetization was
to curb corruption as well as to “help encourage a move toward digital
commerce.”
The
move was briefly successful as people struggled to get banknotes but
soon Indians had reverted to cash as once the number of notes in
circulation rose.
Indians prefer cash for various reasons,
including to avoid paying higher taxes after a national sales tax was
implemented in mid-2017 and higher charges from retailers.
Smaller
stores that do not enjoy high volume sales often charge customers
extra, to make up for what they must pay the service partners for
electronic transactions.
Meanwhile, the Modi government, which is
aiming for a billion digital transactions per day, still does not have
an official stance on virtual or digital currencies issued technology
companies.
In the past, The Reserve Bank of India (RBI) issued
adverse notices against the use of cryptocurrencies, and in 2018, it
banned financial institutions from working with cryptocurrency-related
businesses.
However, the country’s Supreme Court has since overturned that decree.
Still, Indian media reports in June suggest an announcement that clarifies India’s stance on cryptocurrencies is imminent. Some crypto-related businesses are hopeful the government will not ban cryptocurrencies.
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