With economic activity and the market in general seeing a decline amid the second wave of COVID pandemic in India, it seems like people have gone back to how things were during the first lockdown, as transactions and payments went for a dip. In simple terms, a report released by the Reserve Bank of India (RBI) has revealed that payments through all forms, from Unified Payment Interface (UPI) to cash and NEFT transactions, have seen a sharp decline in the month of May.
As per the report, IMPS (real-time bank transactions), FasTag, and UPI, which are under the control of the National Payments Corporation of India, were amid the gateways which saw a significant decline, as were the RTGS and NEFT transaction gateways (which are mostly used for transferring large sums in business) run by the RBI itself. Even cash withdrawals from the ATM saw a dip.
Reduced economic speed as businesses shift to shutting down or no-work days, have been said to be the major culprits. Another cause might be the decrease in the number of outings people make, for fear of the COVID. Lesser outings might tie up with lesser purchasing, and decreased withdrawals.
Nevertheless, even amid this generalized fall, two platforms reported growth in terms of the number of transactions and payments. The first of these was the Bharat Bill Payments System, which is used for transactions involved in the payments of bills online. The second was the Aadhar Enabled Payments System (AePS), which is managed by the NPCI, and is responsible for the government’s sustenance payouts and direct benefits payments (the growth for the AePS may, as a result, be self-explanatory).
The decline in RTGS and NEFT may be especially concerning, since these gateways are most often used by businesses to make salary payments to their employees. NEFT, short for National Electronic Fund Transfer, saw some 256.5 million transactions, worth nearly ₹ 18.19 lakh crore, in the month of May, and reported a fall of around 10.3% from April (when about ₹ 20.46 lakh crore were transacted in some 286 million settlements).
The RTGS (Real Time Gross Settlements) was in for an even steeper fall, seeing a fall of 18% this month, reaching a value of 12.6 million transactions worth ₹ 83.66 lakh crore. UPI saw a comparatively smaller decline, falling 5% as compared to April. IMPS (Immediate Payment Service) also noted a net fall of 15%.
Credit and debit cards were not to be left behind, seeing a decline of 20.9% and 25%, respectively, as against April. ATM withdrawals were among the worst hit, seeing a decline of 21% as compared to April, and landing at ₹ 1.07 lakh crore from 250 million transactions. The value in April was at ₹ 1.31 lakh crore from 302 million withdrawals.