Demonetisation has brought the nation at least three years ahead in digital payments, SBI Ecoflash stated in its latest issue published on Thursday.
“If demonetisation had not happened, it would have taken three years more for credit plus debit cards transactions on point of sales (PoS) terminals to reach the current level of Rs 700 billion (assuming a yearly growth rate of 25%),” the report stated.
“We believe that increasing number of PoS terminals (post demonetisation Indian banks have been able to set up 11.8 lakh extra PoS terminals) and ease of doing digital transaction will increase this level further. Clearly, India has leapfrogged three years of digitization in just seven months!” it said.
The report stated similar trends are observed in the case of usage of pre-paid instruments (PPI) (like m-Wallet, PPI cards and paper vouchers) and mobile banking too.
It said PPI witnessed a sharp growth with transactions valued at Rs 107 billion in May 2017 compared to Rs 51 billion in November 2016.
The report stated that such digitisation will result in lower inflation.
“We estimated a simple regression model by taking headline CPI (consumer price-based index) inflation as dependent variable and credit plus debit cards transactions on PoS terminals in Rs billion as independent variable. The estimated model was statistically significant and the results indicate an increase in Rs 100 billion transaction by credit plus debit cards at PoS terminals will lead to around 1.1% decline in CPI inflation,” the report said.