Benchmarking India s Payment Systems

The Reserve Bank of India (RBI) report “Benchmarking India s Payment Systems” provides a comparison of the payment ecosystem in India with the payment systems and usage trends in other major countries.

Findings of the Report

• Even though there was robust growth in the volume of retail electronic transactions amid a strong regulatory framework, India needs to enhance its payments acceptance infrastructure.
• India has a strong regulatory system and robust large value and retail payment systems. These have contributed to the rapid growth in the volume of transactions in these payment systems.
• India is required to take further efforts to bring down the volume of paper-clearing and increase acceptance infrastructure to enhance digital payments.
• The growth in the volume of payment systems transactions had been strong and steady, the relatively high level of cash in circulation offered scope for a higher level of digitisation of payments.
• There was an increase in Point of Sale (PoS) terminals, including mobile terminals. But they may not be enough to cater to the large population.
• There was a low digital payment of utility bills, despite the existence of the Bharat Bill Payment System (BBPS), an integrated interoperable bill payment system.
• Last few years since demonetisation have witnessed a sea change in the payments landscape, with large growth in digital payments.
• The volume growth of retail electronic transactions was 95% in 2018-19 compared to 51% in the previous year.
• This growth was attributed to the steep growth in the use of the Unified Payments Interface (UPI).
• The level of credit card penetration in India was low when compared to advanced countries
• Card infrastructure is required to be robust, strong and secure to encourage usage of cards
• The last-mile availability of PoS terminals is relatively lower in India and much needs to be done in this regard.

The RBI had undertaken the exercise of benchmarking India s payment systems vis- -vis payment systems in a mix of advanced economies, Asian economies and the BRICS nations.