By Devanshee Dave
After demonetisation, there has been a boost in digital transactions in India in terms of online shopping, online money transfer through mobile banking, net banking and more. A few days ago, a report titled ‘World Payment Report 2017’ stated how the Chinese dragon is still ahead of India in the digital payment option.
World Payment Report
Capgemini and BNP Paribas bank released the report. According to the report, China is expected to be ahead of India for the period of 201620, in terms of digital payment and average growth rate. For the period of 201620, China’s average growth is likely to get stable at 36 percent while Indian growth is anticipated to be 26.2 percent for the same period.
As per the report, China ranked third in 2015 with 38.1 billion digital transactions. On the other hand, India is yet to make its place in the top ten, which is likely to happen at the time of the next report. Indian digital transactions were 4.5 billion in the year 2015. Due to the Indian Governments aggressive target of 25 billion non-cash transactions in 201718 through mobile, government benefits, subsidy transfer and micropayments, India has got the estimation of 26.2 percent compounded annual growth rate (CAGR).
India is expected to get 25 billion digital transactions, of which 11 billion (44 percent) would be from card transaction, six billion (24 percent) mobile transfers, and eight billion (32 percent) online transfers. The use of debit and credit cards is the most important part of the electronic transaction. In 2015, debit cards accounted for 46 percent of non-cash transactions and credit cards amounted to 19.5 percent.
Growth in the developing world
Capgeminis cards and payment practice leader Christophe Vergne told CNBC, “Non-cash payments have increased in volume due to the rise in adoption of digital payment services across all market segments. Both entities have also concluded that technological innovations like connected homes, contactless bank cards, wearable devices and augmented reality will drive cashless transactions in the future.
As anticipated, by 2020, 726 billion transactions will be made via digital payment technologies. According to the report, developing countries are expected to grow further in terms of digital payments than developed countries. The growth rate of digital payments in developing nations stood at 21.6 percent between 2014 to 2015 comparing developed nations that stand only at 6.8 percent. Also, non-cash transactions in Asian developing countries have developed by 30.9 percent mainly due to India and China.
Chinese position versus India’s stand
When compared to India, the Chinese development is higher. In 2015, the growth of electronic transactions in China was 63.2 percent as they have the payment habits of transitioning directly from cash to mobile payments. The approximate growth of China for 2016 was expected to be 45 percent. There has also been a positive ray of hope for China as approximately 50 percent of the smartphone users are expected to adopt mobile payments by 2020. All these scenarios have achieved the Chinese average growth rate of 36 percent.
As per an article published on ZEE Business in July this year, according to State Bank of India (SBI), demonetisation has paved the way for the future of digital transactions in India. As per the SBI, demonetisation has boosted the digital growth and as a result, currently, India is at the position which without demonetisation would have taken three more years. The report states that point of sales (PoS) transactions have crossed Rs 70,000 crore through the use of cards. Prepaid instruments like m-Wallet, PPI cards, paper vouchers and mobile banking have also seen an increase in terms of non-cash transactions. For example, PPI transactions value worth Rs 107 billion in May 2017 compared to Rs 51 billion in November 2016.
Though India is not ahead of China, it is ahead of what it was a few years back. Slowly, India is growing on the path of improvement in digital payment options. All we can do is hope to witness India in the top ten for the next report.
Photo credit: Vodafone Germany Corporate Communications via Visual hunt / CC BY-ND