Digital payments across country jumped in March 2023 on YoY basis: RBI data
The Reserve Bank of India (RBI) has reported a significant increase in digital payments throughout the country on a year-on-year (YoY) basis by the end of March 2023. The RBI-DPI (Digital Payments Index) has shown a notable uptick across all parameters, driven by substantial growth in payment infrastructure and improved payment performance across India during the period.
The RBI-DPI index serves as a comprehensive indicator of the adoption and efficiency of digital payment systems in the country. The positive growth trends across all parameters in the index signal a strong momentum in the adoption of digital payment methods and the expansion of payment infrastructure across various sectors.
The increased reliance on digital payments highlights the evolving preferences and behavior of consumers and businesses alike, as they embrace the convenience, security, and efficiency of cashless transactions. The growth in digital payments is likely to have a far-reaching impact on India’s economy, contributing to financial inclusion, transparency, and the formalization of the financial system.
The RBI’s data underscores the success of India’s efforts to promote digitalization and financial technology, as well as the growing acceptance of digital payment options by individuals and businesses. This progress in digital payments is a testament to the advancements in technology and the collaborative efforts of various stakeholders, including financial institutions, fintech companies, government initiatives, and consumers.
As the trend of digital payments continues to rise, it is expected to play a crucial role in shaping India’s economic landscape, driving financial inclusion, and fostering a more efficient and secure financial ecosystem. The RBI’s focus on monitoring and evaluating the digital payments landscape through the RBI-DPI index will contribute to further improvements and innovations in the digital payment space, benefiting both the economy and the population at large.
The Reserve Bank of India (RBI) has revealed that its digital payment index (RBI-DPI) witnessed a notable rise over the period from March 2022 to March 2023. According to the central bank’s press release on July 27, 2023, the RBI-DPI index reached 395.57 in March 2023, a substantial increase from 377.46 in September 2022 and 349.30 in March 2022.
The surge in the RBI-DPI index reflects the remarkable progress and adoption of digital payment systems in India. The index’s growth across all parameters signifies the robust expansion of payment infrastructure and the enhanced performance of digital payment systems across the country during the mentioned period.
The upward trajectory of the RBI-DPI index highlights the increasing popularity and effectiveness of digital payment methods among individuals and businesses. This rise can be attributed to various factors, including the government’s push for digitalization, the proliferation of smartphones, the availability of user-friendly digital payment platforms, and the efforts of financial institutions and fintech companies in promoting cashless transactions.
The RBI’s commitment to monitoring and evaluating the digital payment landscape through the RBI-DPI index demonstrates the central bank’s proactive approach in fostering a digitized and inclusive financial ecosystem in the country. The growing reliance on digital payments is expected to contribute significantly to India’s economic growth, financial inclusion, and overall financial stability.
As digital payment methods continue to evolve and gain traction, it is likely that the RBI will continue to enhance the RBI-DPI index to capture the dynamic nature of the digital payment landscape. This data-driven approach will aid in identifying areas for improvement and optimizing digital payment systems to meet the evolving needs of consumers and businesses, thereby accelerating India’s journey towards a digital and cashless economy.
Indeed, the RBI-DPI (Reserve Bank of India Digital Payments Index) has shown substantial growth over the past years, reflecting the increasing digitization of payments across India. As of March 2022, the index stood at 349.30, compared to 304.06 in September 2021 and 270.59 in March 2021. This upward trend indicates a significant rise in the adoption and usage of digital payment methods within the country during the mentioned period.
The RBI-DPI was first introduced in March 2018 as a composite index to gauge the level of digitization of payments across India. The index serves as a comprehensive measure, taking into account various parameters to assess the extent of digital payment adoption and the efficiency of payment systems nationwide.
The consistent growth of the RBI-DPI over the years demonstrates the success of India’s efforts to promote digital payments and build a more cashless economy. The government’s initiatives, along with the active participation of financial institutions, fintech companies, and other stakeholders, have contributed to the growing acceptance of digital payment methods among individuals and businesses.
As the RBI continues to update and refine the RBI-DPI, it serves as a valuable tool for monitoring and analyzing the progress of digital payment adoption in the country. The increasing digitization of payments is expected to have a transformative impact on India’s financial ecosystem, driving financial inclusion, enhancing transparency, and fostering economic growth.
By embracing digital payment technologies and creating an enabling environment for their use, India is moving towards a more efficient and secure payment landscape, enhancing the overall ease of conducting financial transactions for its citizens and businesses. The continued growth of the RBI-DPI signifies the country’s commitment to becoming a leading digital economy, with digital payments playing a pivotal role in shaping its future financial landscape.
The RBI-DPI (Reserve Bank of India Digital Payments Index) is constructed based on five key parameters, providing a comprehensive assessment of the level of digitization and penetration of digital payments in India during various periods.
1. Payment Enablers (Weight 25%): This parameter evaluates the factors that enable digital payments, including the availability and accessibility of digital payment options, technological advancements, and regulatory framework supporting digital transactions.
2. Payment Infrastructure Demand-Side Factors (Weight 10%): This aspect considers the demand-side factors that influence the adoption of digital payments, such as consumer preferences, behavior, and the willingness to embrace digital payment methods.
3. Payment Infrastructure Supply-Side Factors (Weight 15%): The supply-side factors involve an assessment of the digital payment infrastructure, including the availability and efficiency of payment systems, networks, and platforms.
4. Payment Performance (Weight 45%): This parameter evaluates the actual performance of digital payments in terms of transaction volumes, value, and success rates, reflecting the effectiveness and reliability of digital payment methods.
5. Consumer Centricity (Weight 5%): The consumer-centricity factor considers aspects related to customer experience, ease of use, and customer satisfaction with digital payment services.
The weights assigned to each parameter reflect their relative importance in determining the overall RBI-DPI score. Payment performance, being the most crucial aspect, carries the highest weight at 45%, while the other parameters have varying weights, ranging from 25% to 5%.
The RBI-DPI is published on a semi-annual basis, starting from March 2021, with a four-month lag. This means that the index is released with data covering different periods, providing regular insights into the progress and trends in digital payments across India.
The RBI-DPI serves as a vital tool for policymakers, regulators, and stakeholders to assess the impact of initiatives and policies aimed at promoting digital payments and building a more inclusive and digitized financial ecosystem in the country. By evaluating these key parameters, the RBI can monitor the effectiveness of digital payment measures and make data-driven decisions to further advance India’s digital payment landscape.
