Impact of the Covid-19 Outbreak on Digital Payments

The lockdown and subsequent restrictions around the Covid-19 pandemic resulted in decreased mobility for almost everyone in India. With people constrained to the boundaries of their homes, it is not surprising that the usage of digital payments rose considerably during this period.

There was also an increase in the demand for currency during this period as per the Reserve Bank of India's annual report for 2019-2020. Concerns about the coronavirus spreading through touch has resulted in more people preferring digital payments over even cash or other payment methods. The preference for contactless payments has resulted in digital payments now being back to the levels it was before the Covid-19 pandemic.

Data from the National Payments Corporation of India (NPCI) reveal that digital payments are back at pre-Covid-19 levels as people continue to prefer contactless payments.

There were more than 180 crore transactions on the Unified Payments Interface (UPI) in September 2020 whereas in August of 2019, there were 161 crore transactions. The Immediate Payment Service (IMPS) had a total of 2.79 crore transactions in September 2020. Bharat Bill Pay had 2.31 crore transactions in September 2020. Data from bankers show that big-ticket spends on hospitality and travel reduced drastically in 2020 due to the travel restrictions although the number of transactions on e-commerce sites through the credit and debit card mode had returned to pre-Covid levels by September 2020.

However, cash withdrawals through ATMs continued through the lockdown period and even afterwards as people continued to want to keep cash at home in case of emergencies, especially in such times of uncertainty.

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