Why 2021 has been the best digital Diwali in recent years
Consumers have now switched to better technology platforms like United Payment Interface (UPI) that do not require the intervention of a POS machine.
Digital transactions saw a massive leap in 2021, with consumers opting for easy payment options during Diwali shopping week.
Even though record purchases amounting to Rs 1.25 lakh crore took place during Diwali, the latest data on currency in circulation (CIC) showed it remained constant from the previous year.
Regular currency growth
SBI economists estimated that the Covid pandemic may have prompted people to hold up to Rs 3.3 lakh crore in cash for precautionary purposes in FY21.
“If we adjust these currency transactions, the currency-to-GDP ratio for pure payment purposes may actually have declined in FY21 compared to previous years,” he noted.
However, the currency’s almost constant growth has been brought under control by a significant increase in digital payments.
Jump into digital payments
The report showed that up to 3.5 billion transactions worth Rs 6.3 trillion were recorded through UPI in October. This is a 100% jump from the same period last year.
The value of transactions also jumped nearly 103 percent during the same period.
In addition, data showed that UPI transactions have jumped 69 times since 2017, from Rs 1,700 crore to Rs 1,17,100 crore so far in 2021.
Likewise, credit card spending increased dramatically between 2012, when it was only Rs 1,500 crore. It then peaked at Rs 13,500 crore in 2020.
The report adds that credit card spending is set to set a record this year, as already since the start of the year (year to date) it has reached Rs 13,300 crore.
However, debit card transactions have stagnated in proportion, indicating the preference and shift to UPI mode.