Cashless economy remains a far cry! Consumers prefer cash over digital prove RBI data

Cash crunch

New Delhi, March 4: A sharp fall is recorded in cash transactions in February 2017 reflecting public’s endurance for cash payments against digital transaction.

Post demonetisation, Modi government had widely pitched in for cashless economy. But owing to availability of cash in months of January and February post noteban, the month on month increase in cash transaction is being recorded.

As per RBI data, February 2017 saw a steep 21.3 per cent fall in the volume of electronic transactions as compared to January this year. Similarly January 2017 saw 9.1 per cent fall as compared to December 2016 digital transactions.

The RBI data reveals that 870 million e-transactions in January 2017 slide to 684 million in February. While in value terms, the decline is 16.7 per cent valued at Rs 97,011 billion in January 2016 to Rs 80,765 billion in February 2017. The decline in value terms for January 2017 over December 2016 stood at 6.8 per cent.

Even as February had three transaction days less in comparison to January 2017, value of digital transactions in February has slipped below the numbers recorded in November when demonetisation was announced.

In all, February saw 20.4 per cent fall in the volume of transactions through NEFT, 22.9 per cent for cheque payment as compared to January. Similarly volume of transactions through plastic cards at PoS terminals fell sharply by 28.3 per cent while that through mobile banking declined by 20.7 per cent.

In December 2016, transactions via electronic payment methods had peaked and the volumes jumped to 957 million (684 million in February) following severe cash crunch post demonetisation and Centre’s temporary incentives for promoting digital payments.

The data released by the Reserve Bank of India clearly indicates the consumers have begun to move back to their traditional payment method.

Although a part of decline in e payments could be attributed to improved cash availability in January and February compared to months (November and December) post demonetisation.

The biggest fall is recorded in cheque payments, debit and credit card transactions at point of sale (PoS) terminals and mobile banking.

The current trend of falling e-transactions also signifies public’s preference for cash transaction.

A senior government however said “Currently, both cash and digital payments have convenience but cash comes without a cost, whereas digital has a cost attached to it. If that’s not dealt with, cash will become more convenient by default and people will go back to using it when supply in the economy is normalised. For this, some tweaking of policy is required so that digital payments become a habit.

Wefornews Bureau

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