Digital transactions up for some banks

Banks such as State Bank of India, ICICI Bank and Punjab National Bank are reporting a sharp rise in digital transactions, especially in net banking, point of sale (PoS) and mobile banking.

As of March 2018, internet, mobile banking and PoS transactions combined stood at 37 per cent for SBI, while they were only 31 per cent in the year-ago period.

If ATM and Business Correspondents are also included it goes up to 80 per cent. With 6.10 lakh PoS terminals, SBI now commands a 20.20 per cent market share in the segment.

Demonetisation effect

There has been a surge in the number of PoS machines since demonetisation was announced by Prime Minister Narendra Modi in November 2016. Their number has gone up from 1.3 million before demonetisation to 3.2 million now and is expected to touch 5 million by the year-end, thanks to a region-specific push by banks.

For ICICI Bank, the share of digital channels such as Internet, mobile banking, PoS and call centre in total savings transactions increased by 82 per cent in the last financial year. The bank has on-boarded 250 corporates on its blockchain platform for domestic and international finance as part of its digital drive.

All this has meant declining footfalls at the branches of these banks. For example, branch-based transactions in SBI declined to 20 per cent in FY18 compared to the previous fiscal year.

A look at other banks’ data on the share of digital transactions or other parameters such as increase in quantum of payments made through Direct Benefit Transfer shows that this is a common trend. For instance, Punjab National Bank reported a steep increase in Aadhaar-based DBT payments through NPCI up to March 31, 2018.

Key drivers

There are many factors driving this growth. According to R Prabhu, MD and Group CEO, Payswiff, increasing acceptance of debit cards and huge awareness among merchants on the use of debit cards/PoS machines are also driving this growth.

“Another major factor is the waiver of processing fee on use of debit cards up to ₹2,000. Unlike earlier, many retail merchants are now opening up to digital payments post-demonetisation,’’ Prabhu said.

Jan Dhan accounts, too,, are gaining traction along with the use of RuPay Debit cards.

There were 31.73 crore Jan Dhan accounts as on May 30, 2018, while 23.94 crore RuPay cards had been issued. The total deposits in Jan Dhan accounts now stand at ₹80,717.12 crore.