With the second wave of the COVID-19 pandemic in India causing a drop in economic activity and therefore the exchange of normally, it appears that the folks have returned to how things were during the initial lockdown, with transactions and payments taking a success.
As per the report released by RBI(Reserve Bank of India), almost all Digital payment modes, UPI(Unified Payment Interface), cash, saw a decline in May.
Payment methods like IMPS(real-time bank transactions), UPI, and FASTag which are under the control of the National Corporation of India observed a decrease within the payment process.
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The Aadhaar Enabled Payments System (AePS) of the National Payments Corporation of India (NPCI) – the main rail for the government’s direct benefit transfers and sustenance payouts – and the Bharat Bill Payment System (BBPS), which is used for automated bill settlement online – were the only two modes that saw a growth rate in May.
According to the experts, Covid’s impact is the main reason behind the decline. Also, reduced economic performance as enterprises transition to shutting down or no-work days. One more reason could be the decrease in the outings due to the fear of Covid-19, lesser the outings might tie up lesser purchase and transactions.
The decline in transactions in NEFT and RTGS is a matter of concern as these are used by businesses to make a salary to the employees.
In May, NEFT, which stands for National Electronic Fund Transfer, saw 256.5 million transactions totaling about 18.19 lakh crore, a drop of roughly 10.3% from April (when around 20.46 lakh crore was transacted in 286 million settlements).
UPI observed a fall of 5% in May. Also, it recorded 2.53 billion transactions valued at Rs. 4.9 lakh crore, which was way less than the transaction made in April of 2.64 billion worth of Rs.4.93 lakh crore.
Credit and debit cards did not fare well, with declines of 20.9 percent and 25 percent, respectively, as compared to April. Withdrawals from ATMs were among the most impacted, with a 21 percent drop from April and a total of 1.07 lakh crore from 250 million transactions. In April, the value was 1.31 lakh crore, based on 302 million withdrawals.
There were 82.4 million micro-ATM transactions worth Rs 24,138 crore in May, up from 72.5 million worth Rs 21,700 crore in April.