Going cashless?

The government’s demonetisation measures have led to a jump in card and digital transactions, but this has not been anywhere near large enough to offset the slowdown in cash spending. That said, it seems unlikely that cashless payments will retreat to previous levels even as new banknotes become more widely available. This should help to support a recovery in consumption later this year. Data from the RBI show a sharp rise in point of sales use of credit and debit cards in November. There was a particularly large jump in debit card usage, where the number of transactions almost doubled. In addition, many digital payment firms – including Patym, Mobikwik, and Oxigen – have reported a jump in the number of account openings in the past few weeks. • However, while cashless transaction volumes have risen sharply, the data on cashless transaction values is less impressive. In total, card transaction values at the point of sale rose from INR520bn (US$7.6bn) in October to INR580bn (US$8.5bn) in November. This was actually a smaller increase from a month earlier. The smaller rise in values compared to volumes in November suggests that increased card usage has been driven (unsurprisingly) by purchases of small or essential items that consumers would usually pay cash for.