Money & Banking

Electronic payments up, but cheque transactions higher

Arvind Jayaram BL Research Bureau | Updated on May 17, 2012

Cheques are still the preferred mode for making high value transactions in the country, RBI data shows. Use of electronic payment systems gained traction in 2011-12, but the volume and value of transactions was far less than cheque payments.

Cheque payments amounted to a whopping Rs 98.9 lakh crore, against the Rs 22 lakh crore paid using the electronic medium in 2011-12.

Over 115.9 crore credit card, debit card, electronic clearing services (ECS) and national electronic fund transfers (NEFT) took place during the year. This was a tad lower than the 134.1 crore payments made through cheques.

Higher value

Nevertheless, electronic payment systems are clearly gaining popularity in India, with the number of transactions rising by 27.7 per cent, and their value up nearly 70 per cent year-on-year in 2011-12. In contrast, the number of transactions using cheques declined by around 3 per cent and the value of transactions dipped by around the same amount vis-à-vis 2010-11 levels.

Over the years, too, a clear trend is visible in the growing popularity of electronic payment systems.

The number of payments made using electronic payment systems rose almost 10-fold and the value of transactions around four-fold by 2011-12 from 2003-04 levels. In contrast, the number of transactions using cheques registered slower growth of around 31 per cent and the value has declined by around 15 per cent.

NEFT accounted for the bulk of the electronic transactions in 2011-12, rising by 70.8 per cent rise in volume terms and a 90.6 per cent increase in value terms. In contrast, ECS transactions (both credit and debit) grew by 4.4 per cent (volume) and 4.5 per cent (value) year-on-year, respectively.

Credit card transactions

However, the maximum volume of electronic payments was through credit cards and debit cards. Credit card transactions in 2011-12 grew by 20.6 per cent in volume terms and 27.9 per cent in value terms over 2010-11.

The increase in the number and value of credit card transactions was despite a 3.2 per cent decline in the number of outstanding credit cards issued in 2011-12.

A similar trend was seen for debit cards, with the number of transactions rising by 38.1 per cent and the value increasing by 38 per cent. However, the number of outstanding debit cards rose by 22.1 per cent in 2011-12.

Published on May 17, 2012

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