As cash usage continuing to remain high despite a jump in online payments, a top NPCI official said currency in circulation will reduce only when a third of the population starts using digital payment alternatives.
National Payments Corporation of India (NPCI) Managing Director and Chief Executive Officer Dilip Asbe said that right now, the overall universe of people using services like the Unified Payments Interface (UPI) is 250 million or about a fifth of the population.
Dilip Asbe said :
Given the current growth, Dilip Asbe said it will take between 12 and 18 months for the reduction in cash in circulation.
For the last many months, high Currency in Circulation (CIC) has been baffling industry watchers since official data has been showing a spike in digital payments through mediums such as UPI.
CIC has risen to over 14% of GDP as against 12% in 2016 during demonetisation.
Dilip Asbe explain that it is a “complex situation”, and point out that despite the payments into people’s bank accounts under the direct benefit transfer scheme, people cash out from the Automated Teller Machines (ATMs).
As, ‘rolling cash’ has also increase as seen at ATMs and point of sale transactions’ average ticket sizes.
Dilip Asbe said, CIC as a percentage of GDP is in single digits, and given all the efforts and awareness campaigns, “we should aim for the CIC to reduce to single digits in the next five years”.
Dilip Asbe said there will be ten times growth in the transaction volumes and Indians will be executing a billion digital payments transaction in a day.
He also said that in the next couple of months, RuPay credit cards will be link to the UPI platform.
NPCI is in talks with SBI Cards, BoB Cards, Axis Bank and Union Bank of India for the same and will submit a proposal to the Reserve Bank of India (RBI) to take forward the policy announcement on the UPI front.
Dilip Asbe said :
UPI transactions, which were carried out till now link to saving bank accounts, are free by mandate while the credit card players are allow to charge up to 2% of a transaction as MDR which is to be paid by merchants.
Dilip Asbe said NPCI is in talks with over 30 countries from an internationalisation of UPI perspective, which includes both helping countries create their own payments networks and also making cross-country payments easier using the platform.