The Reserve Bank of India’s Digital Payments Index (RBI-DPI), which measures the growth of online payments in India, showed a 13.24 per cent growth in the year ending March 2023, indicating a strong trend in online transactions.
In March 2023, the index recorded a score of 395.57, up from 377.46 in September 2022 and 349.30 in March 2022, representing a four-fold jump from 2018, the RBI report on July 27 said.
The RBI-DPI index has increased across all parameters, driven by significant growth in payment infrastructure and payment performance across the country in the period, the release said.
Digital retail payments have surged by 50 per cent over the last five years, primarily driven by Unified Payments Interface (UPI). This growth rate outpaced developed economies and even led to a reduction in low denomination notes in circulation in India.
Digital Payments Index
Since January 1, 2021, RBI has been publishing the composite RBI-DPI data, with March 2018 as the base year, capturing the extent of the country’s digitisation of payments.
The RBI-DPI is based on five broad parameters with payment enablers, such as Internet connectivity, Aadhar, bank accounts, etc., having the highest weightage.
Payment infrastructure, demand-side and supply-side factors, payment performance and consumer centricity, are other parameters measuring the penetration by merchants, debit cards, credit cards, FASTags, ATMs, QR codes, etc. The index also considers the volume, the value of digital payments, consumer awareness, complaints, and system downtime.
Recently, UPI formally entered France, and RBI signed an agreement with the Central Bank of the UAE to link UPI with its UAE counterpart Instant Payment Platform (IPP).
Besides UPI, other digital payment modes, such as Immediate Payment Service (IMPS), Bharat Bill Payment System, and National Electronic Toll Collection, have also contributed to the increasing adoption of digital transactions. The Buy-Now-Pay-Later (BNPL) model is gaining popularity among consumers, taking many users to digital payments. These trends have made India a leader in the digital payment space.