The Hindu Business Line : e-payments gain ground; surge 41% in first half

Total payments made via retail electronic payment systems - electronic clearing service (ECS), National Electronic Funds Transfer (NEFT) system, and credit and debit cards - have surged by 41 per cent to Rs 2,31,387.18 crore in the first half of the current financial year as against Rs 1,63,826.15 crore in the corresponding period last year.

The number of transactions has also gone up in sync with the transaction volumes, with the number of transactions a month averaging 548.80 lakh in the first half of FY2008-09 as against 406.09 lakh in the corresponding period last year.

However, as a percentage of total payments (not taking into account cash payments which will be much larger and difficult to estimate and also discounting by 90 per cent the high value transactions of trade and industry putting through the RTGS) in the economy, retail electronic payments account for only a minuscule two per cent of the recorded payments. The increased use of electronic payments is in keeping with RBI's stated objective to have banks migrate their customers to new payment systems in order facilitate faster movement of funds in the economy with increased efficiency, safety and security arrangements and reduce the usage of currency and paper-based payment instruments.

"While large corporates have realised the cost effectiveness of migrating to electronic payments, there is a lack of awareness among retail customers about the utility of using this channel," said a senior official with a public sector bank.

According to the latest RBI data on retail electronic payments, payments routed through NEFT system - a nation wide funds transfer system to facilitate transfer of funds from any bank branch to any other bank branch - accounted for around 46 per cent (Rs 1,06,982.59 crore) of the total retail electronic payments made in the first half of the current financial year as against 35 per cent (Rs 57,911 crore) in the corresponding period last year.

Recently, more than 50,000 branches of 87 banks spread across the country are participating in the NEFT system.

ECS route

Payments made through ECS - a mode of electronic funds transfer from one bank account to another bank account using the services of a Clearing House. This is normally for bulk transfers from one account to many accounts or vice-versa - have increased by 11 per cent to aggregate Rs 82,402.71 crore in the first six months of the reporting financial year as against Rs 74,353.05 crore in the corresponding period last year.

The RBI has deregulated Service Charges to be levied by sponsor banks offering ECS facility. Processing Charges levied by RBI and other banks managing the clearing houses has been waived till March 31, 2009.

Payments made through cards - credit as well as debit - have risen by 33 per cent to aggregate Rs 42,001.89 crore in the first six months of the current financial year as against Rs 31,562.09 crore.

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