The pandemic has accelerated India’s transition to a digital economy. From over 70% of point-of-sale (PoS) transactions conducted in cash in 2019, the share has almost halved to 37% in 2021. Notably, the share of digital wallets in the mix has improved significantly, from just 5% of PoS payments. 25% over the same period. Only China seems to mimic this phenomenal increase in wallet payments. The recently introduced Digital Payments Index by the RBI also shows that digital payments have increased in India, especially during the pandemic. However, currency in circulation as a % of GDP has surpassed pre-demonetization levels in India and is the highest among the economies compared

Preferred Wallets

The chart shows the % share of point-of-sale payments made using different methods. The share of cash has fallen from over 70% to 37% between 2019 and 2021. During the same period, the share of wallets has increased from 5% to 25%

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India against others

The chart expands Chart 1 for selected economies. Credit cards and debit cards in PoS transactions are still the preferred modes in most countries, while India and China stand out for their preference for digital wallets.

Digital payments on the rise

The graph shows the RBI’s Digital Payments Index which measures the extent of digitalization of payments in India. The graph shows that digital payments grew by more than 200% between 2018 and 2021

Cash flow peaks

The chart shows the ratio of cash in circulation to GDP among selected economies. While digital payments have increased in most economies, the circulation of cash has increased dramatically post-pandemic. In India in particular, the ratio peaked in 2020 and was the highest among the economies compared

Source: Bank for International Settlements, FIS Worldpay

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