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THE IMPACT OF PANDEMIC ON DIGITAL PAYMENTS IN INDIA

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Journal of the Maharaja Sayajirao University of Baroda ISSN : 0025-0422

THE IMPACT OF PANDEMIC ON DIGITAL PAYMENTS IN INDIA

Dr Nirmala M, Associate Professor, Canara Bank School of Management, Bangalore City

University, Bangalore

Parvathi S, Research scholar, Canara Bank School of Management, Bangalore City University,
Bangalore

ABSTRACT
In the current situation, Digital payments play a vital role and has many advantages over cash, such
as easy transaction, security and transparency. Banking sector play a key role in digital payment by
offering digital instruments such as debit cards, mobile banking, mobile wallets etc. in this pandemic
situation. The pandemic could drive the world faster towards digital payments. Circumstances fuelling
digital payment. Payment systems have proven that they are efficient and sustainable and continue to
command a high degree of trust in the general population. However, the closure of the companies and
the lock-down resulted in lower average transaction volumes. In order to aid the recovery and
contribute to the emerge of this new standard, it is imperative that the digital payments environment
evolves rapidly and help from the Post-COVID period.
This paper focus on the importance of Digital payments during pandemic, different modes of digital
payment systems, the growth of digital payment from last three years. And also, The road ahead in
the digital payment.
Key words: Pandemic, Digital payment, Mobile Banking, e-Banking, Cashless

INTRODUCTION
Digital payments play an important role in this pandemic. In view of the current situation in which
individuals are forced to maintain a physical distance, digital payment modes are actually being
adopted. Many businesses were shattered completely after the arrival of the coronavirus. Small
merchants, moreover, closed their shops. Many people across the globe have lost their sources of
income. All these things have made the economic situation very unfortunate. However, digital
payment modes play a very beneficial role in the face of this critical situation.
Digital payments in India have risen since the Pandemic. The Coronavirus epidemic will eventually
achieve what India's shock demonetization struggled to achieve four years ago by using digital
payment from the electricity bill to the cab fares.
"People who have never paid online bills are paying online for people who have never bought online
grocery stores to buy online." Said Nithyananda Sharma, Chief Executive Officer of Get Simple
Technology Pvt, Ltd., which helps people to order food and groceries online and pay online payment,
"What would have taken five years has happened in the last three months."
Initially, digital payments increased as people struggled to get bank notes, but shifted to cash as the
amount of notes in circulation rose again. Now the pandemic that made people afraid of near personal
connections is giving internet payments a fresh rise.

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The Digital India program is the Indian government's key outcome, whose vision is to transform India
into a digital society and an information economy. One of the positions Digital India professes is
"Faceless, paperless, cashless”. There are different digital payment methods available as part of
encouraging cashless transactions and transforming India to a business with no cash. It is likely that
demonetization would be characterized as a game changer for the Indian economy. Demonetization,
on the other hand, leads to booming cashless payments. All payments will be made in this futuristic
world using contactless cards, cell phone apps and other electronic means, while notes and coins will
be eliminated.
At present, the government is actively encouraging individuals to accept digital payments if it was for
convenience earlier, but now it has become compulsory with social distancing and the COVID-19
crisis because Novel Corona Virus (Covid-19) is rare and there are hundreds of different Corona
Viruses, most of which are found in animals such as pigs, camels, bats and cats. But they will transmit
from animals to humans sometimes. When they do, they cause chronic cold diseases that affect the
upper respiratory system. It is extremely unusual for the animal Corona virus to infect humans and
then transmit between individuals. It is extremely unusual for the animal Corona virus to infect
individuals and then transmit between individuals. However, over the past two decades, three of the
seven Corona Viruses believed to impact humans, which now includes SAR-COV-2, have originated
from animals and have caused serious, widespread disease and death as at present (01-01-2021) Global
reported cases 83,963,759, Global deaths (1,827,539), 2.18 percent, Global recovery (47,289,065)
56.32%.
Large-scale acceptance of digital payments was observed as the first big wave post demonetization.
During the pandemic and lock down, the second major wave arrived for Digital payments.
Central Government has long tried to drive digital payments to India, where three out of four customer
purchases are in cash. In November 2016, Central Government suddenly and unexpectedly invalidated
much of the country's high-value currency notes-more targeted at curbing inflation, which he also
noted later helped to promote a shift towards digital transactions.
Via our on-going 'UPI chalega' initiative, we have launched India pay safe in the current social
distancing climate to raise awareness of paying secure with digital payments. We hope that we will
inspire a lot of individuals who have been used to managing cash to turn to digital payments and make
a normal change. In terms of using UPI as a fast, stable and instant digital payment process, the
initiative pushes a wider public message. We have even attempted to use some celebrities to push the
cause that we have built UPIchalege.com Microsite where you can find all valuable details on how to
safely use UPI.
Obviously, technology has made our lives simpler. Electronic payments are one of the technological
developments in banking, finance and trade. Electronic Payments (e-payments) refers to the technical
advancement that helps us to electronically conduct financial transactions, eliminating long queues
and other problems. Electronic Payments gives people more flexibility to pay their taxes, permits,
penalties, fines and transactions at unconventional places and 365 days of the year at any time of the
day.

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Importance of Digital Payments

Cost Savings
Digital Payments will reduce a huge amount of cost that governments and companies used to invest.
Accessibility and Convenience
Using digital payment modes is very easy. You can make online payments within a second. In case of
a contactless transaction, you need to hover your card over the payment equipment. People can use it
using any mobile device.
Lower Risk
Online payment gateway will securely send the important transaction details. There is no specific time
for making an online transaction, you can do it whenever you want.
Trace Everything
The best part of using digital payment mode is that you can trace your transaction.
Future of Digital Payment
After the arrival of COVID-19, the online payment industry is booming. Various digital payment
companies are doing their hardest to encourage digital payment methods. There is no doubt that the
post pandemic era will be the era of digital payment mode. There are several enterprises that have
introduced advanced payment terminals as technology progresses. This payment terminals would
make it easier for retailers to take payments via credit card. Customers would now have the option to
make deposits in a comfortable manner. As a consequence, for small merchants, the digital payment
mode will be a blessing in disguise.
Various Modes of Digital payments
Formed in 2008, under the patronage of RBI and Indian Bank Association, NPCI has embarked on a
machine for touching every Indian across its diverse range of digital payment items like UPI (Unified
Payment Interface), BHIM (RuPay, NETC, AePS (Aadhaar enabled Payment System), BHIM
Aadhaar, Bharat Billpay, NFS (National Financial Switch), NACH (National Automated Clearing
House), CTS, IMPS (Immediate Payment Service) and to facilitate Safe and protected digital
payments.
These services are helpful in
 Shift of money from person to person
 Person to business, such as kirana stores, petrol stations, recharges, e-commerce,
 Business to business, such as a retailer to supplier or distributor
 Business to person as salaries, reimbursement, claims

REVIEW OF LITERATURE:
Sudha. G, Sornaganesh. V, Thangajesu Satish. M, Chellama. A.V, August 2020. This paper
discusses the different digital payment mechanisms used in the event of a pandemic based on primary
data by gathering data from 220 respondents and the Digital India initiative is an Indian government
flagship program whose vision is to turn India into a digital society and an information economy. In
this futuristic world, all purchases can be made by contactless cards, smart phone apps and other
electronic means. The Reserve Bank of India last year announced that it planned to raise digital
transactions to about 15% of gross domestic product by 2021. The government is looking for a billion

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digital transactions per day as the fastest-growing mobile industry in the world. The collected data are
analysed by applying Appropriate statistical tools like t-test, Chi-square test and ANOVA test.
A.Martina Franciska and Dr. S. Sahayaselvi May - June2015. Study focuses on secondary
information and resources have been collected from books, articles, journals and relevant pages
Review with a view to the review and progress of one of them. This article clarified the different forms
of digital payment transfers used by ordinary people in their day-to-day lives. A total of 4018 billion
mobile banking transactions were completed in 2015-16, compared to 60 billion in 2012-13. Digital
payments to rural regions are now extending the reach of mobile networks, the Internet and electricity.
During the time of demonetization, the Government of India compelled the people to do all trade
directly or indirectly. India has more than 100 crore active network connections and more than 22 core
smartphone users. The cashless change is not only better than the cash exchange, but less time
consuming. So, there is no question that the upcoming transaction method is a cashless transaction.
Arpita Pandey, Mr. Arjun Singh Rathore April 6-7 2018. This article focused on how digitalization
will aid the growth of the Indian economy and the adoption of the new technologies for globalization
and modernization of our region, which contributes to development. All the measures and policies put
in place by the Government of India enable the Indian Community to build information and
understanding, and also clarified how digital payment is becoming the powerful factor that it provides.
safety, security in day-to-day transaction. Knowledge obtained on the basis of secondary evidence
from various research journals, Government records.

Dr Rajeshwari M May-June 2019. This article explaining the operating cost of banks has been
significantly decreased by Digital Banking. This has made it easier for banks to charge lower service
fees and provide higher interest rates for depositors as well. The decrease in operational costs meant
more benefit for the banks. Digital transformation is moving from traditional banking to a digital
world. This paper covers the role of digitization in Indian banking, factors that affect the scope of
digital banking in India, and trends in digital banking in India. Data were derived from a number of
sources, such as journal journals, government publications from India, and various RBI databases. The
study also showed that the simple use of digital banking would drive the integration of the unbanked
economy into the mainstream.

Jayalakshmi. S and Parvathi. S, July 2019. This article showed that digital payment is an effective
means of doing business of all sectors to reach out to prospective clients and to examine the idea of
digital banking, digital payment and digital payment methods. Digital payments have many benefits
over cash, such as simplicity, security and clarity. Slow internet access and extra costs for digital
purchases are a big barrier to the introduction of this digital payment system in India. In the next few
years, there will be a whole new way of transferring capital in the Indian economy.
RESEARCH METHODOLOGY
The research is based on secondary data. The data has been extracted from various sources like
research article, Authenticated Websites, bulletins of RBI, and Daily’s.
OBJECTIVES
1. To Know the Importance of Digital Payment in Pandemic.

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2. To study modes of online payment.

3. To Compare and Analyse present with previous year data of Digital payment.

Outcome of the study

However, digital payments are on the rise in India. As in most other areas of the world, digital
purchases have hit a record high this year in the country with nearly 1.5 billion people. As stated for
the first time by the local outlet, all channels from the unified payment interface (UPI) to the Aadhar-
Enabled Payment System (AEPS) registered dramatic growth.
In comparison to the gloom created by the Covid-19 pandemic and the lockdown across the economy,
digital payments and fintech were one industry that saw record highs in 2020 when a vast number of
people opted to stay at home and retain social distances. With fears over catching new coronavirus
infections from visiting bank branches and using currency notes, many people—not only in metros but
even in smaller towns—began to use their smartphones to make purchases and even take loans for
smooth banking services.
As the COVID-19 lockdown and ensuing constraints pushed more and more people to opt for digital
transactions, Uttar Pradesh reported a huge 126 percent leap in digital transactions in 2020 compared
to the previous year.
In September, the Card spends between 60-70 percent of the January average at the point of sale of
terminals in shops. This means that people use digital payments in physical modes like shopping.
The value of transactions on the Unified Payment Interface, a portal built by India's Largest Banks in
2016, hit an all-time high last month as people worried, they would treat bank notes in the midst of the
pandemic. Transfers of electric funds from banks, which had declined in April as economic growth
slowed by almost half, have also recovered.
Digital payments reached a record high in 2020 with all platforms from the Unified Payments App to
the Aadhar-enabled Payment System (AePS) recording stellar progress.
Cumulative Payment Transactions in the last 12 months
No. of Growth
Transaction in %
(in Crore) (month
on
month)
Jan 2020 436.43
Feb 2020 847.44 94.17
March 2020 1,262.84 49.02
April 2020 1,566.22 24.02
May 2020 1890.23 20.69
June 2020 2,298.85 21.62
July 2020 2,699.06 17.41
August 3,132.43 16.06
2020

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Sept 2020 3,620.51 15.58

Oct 2020 4,108.29 13.47
Nov 2020 4,623.25 12.53
Dec 2020 4,764.28 03.05
(Sources: digipay.gov.in)

Cumulative Payment Transactions in the last 12

months

4,623.25 4,764.28
4,108.29
3,620.51
3,132.43
2,699.06
2,298.85
1890.23
1,566.22
1,262.84
847.44
436.43
94.17 49.02 24.02 20.69 21.62 17.41 16.06 15.58 13.47 12.53 3.05
JAN-20 FEB-20 MAR-20 APR-20 MAY-20 JUN-20 JUL-20 AUG-20 SEP-20 OCT-20 NOV-20 DEC-20

No. of Transaction ( in Crore) Growth in % (month on month)

After passing the 200-crore mark in October, UPI transactions hit a record high of 221 crore
transactions worth 3.9-lakh crore in November. The Centre has set a target of 4,630 crore for digital
payments for 2020-21, which—players are hopeful—is likely to be surpassed.
Though demonetization led to the initial launch of digital payments in India in 2016, the government's
acts have remained complex over time. The global pandemic fuelled the swift and widespread adoption
of digital payments and digital trade in India, said Manish Patel, Founder and CEO of Mswipe.
At Mswipe, contactless payments rose from 13% of total transactions in the month of January 2020 to
30% of total transactions in December 2020.
The government spokesperson said that the state has registered the highest digital payment this year
relative to all other States in the country. It is because of the continuous and intensive focus of Chief
Minister Yogi Adityanath on the assimilation of technology to the economy that people in the state
have made such large-scale digital transactions. UP, with a population of about 24crore, has seen an
online sale.
Digital payments reached a record high in 2020 with all platforms from the Unified Payment Interface
[UPI] to the Aadhar enable Payment System (AePS) recording Stellar growth.
Since exceeding the 200 Crore mark (approx. 27,1563 million) in October 2020. UPI transaction set
another record high at 221 Crore transactions (30 Million+) valued at Rs.3.9 lakh crore (approx. $53
Billion) in November 2020. Approximately $63 billion worth of digital payments is projected to be
accepted (or expected) between 2020-21.
Statewise Distribution of Digital Payment Transaction

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Payment Mode of BHIM *99#, Rupay Card on POS only

SL. STATES DIGITAL
NO. TRANSACTION
(BASED ON PER
CAPITA BASIS)
1 Andhra Pradesh 17.683
2 Arunachal Pradesh 1.041
3 Assam 1.764
4 Bihar 1.361
5 Chattisgarh 38.481
6 Goa 5.886
7 Gujarat 2.389
8 Haryana 12.42
9 Himachal Pradesh 2.834
10 Jarkhand 1.81
11 Karnataka 6.538
12 Kerala 2.909
13 Madhya Pradesh 2.184
14 Maharashtra 6.948
15 Manipur 0.8
16 Meghalaya 0.765
17 Mizoram 0.548
18 Nagaland 0.584
19 Odisha 5.275
20 Punjab 2.041
21 Rajasthan 2.377
22 Sikkim 2.139
23 Tamilnadu 3.437
24 Telangana 2.571
25 Tripura 1.114
26 Uttar Pradesh 7.731
27 Uttarakhand 3.911
28 West Bengal 3.162
(Sources : digipay.gov.in)

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DIGITAL TRANSACTION (BASED ON PER CAPITA BASIS)

45
40
35
30
25
20
15
10
5
0

Madhya Pradesh
Gujarat

Manipur

Tamilnadu
Andhra Pradesh

Chattisgarh

Haryana

Karnataka

Meghalaya

Tripura
Sikkim
Assam

Goa

Kerala

Mizoram
Maharashtra

Nagaland
Odisha

Rajasthan

Telangana
Punjab

Uttar Pradesh
Uttarakhand
Arunachal Pradesh

Himachal Pradesh
Jarkhand
Bihar

West Bengal
Union Territories
SL.NO. UNION TERRITORIES DIGITAL
TRANSACTION
(BASED ON PER
CAPITA)
1 Andaman and Nicobar 2.35
2 Chandigarh 0.419
3 Dadra & Nagar Haveli & Daman & 8.311
Diu
4 Delhi 9.313
5 Jammu & Kashmir 0.796
6 Ladakh -
7 Lakshadweep 1.272
8 Puducherry 4.991
(Sources : digipay.gov.in)

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0.419
2.35
4.991

1.272
0
0.796 8.311

9.313

Andaman and Nicobar Chandigarh

Dadra & Nagar Haveli & Daman & Diu Dehli
Jammu & Kashmir Ladakh
Lakshadweep Puducherry

BHIM – UPI Transactions, Monthly Growth (LAKHS)

2018-2019 2019-2020 2020-2021
April-18 1,899 April-19 7,817 April-20 9,995
May -18 1,893 May -19 7,334 May -20 12,344
June-18 2,462 June-19 7,544 June-20 13,368
July-18 2,355 July-19 8,222 July-20 14,973
August-18 3,119 August-19 9,183 August-20 16,187
September- 4,057 September-19 9,549 September-20 18,001
18
October-18 4,822 October-19 11,483 October-20 20,715
November- 5,248 November-19 12,187 November-20 22,101
18
December-18 6,200 December-19 13,083 December-20 22,341
January-19 6,726 January-20 13,049 January-21
February-19 6,741 February-20 13,256 February-21
March-19 7,994 March-20 12,468 March-21
(Sources: digipay.gov.in)

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BHIM – UPI Transactions, Monthly Growth (LAKHS)

25,000

20,000

15,000

10,000

5,000

0
Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar

2018-2019 2019-2020 2020-2021

As digital payments across India grew at a compound annual growth rate (CAGR) of 55.1 percent over
the past five years between the financial year (FY) 2015-16 and 2019-20, the government's move
toward a cashless economy bore fruit. The RBI disclosed the details. Its value has risen from INR-
920.38 lakh Cr to INR 1623.05 lakh Cr during this time. Clipping at a 15.2 percent compounded annual
rate.
Digital payments have risen at a compounded annual growth rate of 55.1 percent between 2015-16 and
2019-20 from 593.61 Cr in the year to March 2016 to 3,434.56 Cr in the year to March 2020 FY (2020)
saw a huge rise in volumes to 3,434.56 Cr over the previous year but in value slipped down to INR
1,623.05 lakh Cr.
In 2016-17, digital payments rose to INR 969.12 Cr from INR 593.61 Cr in the previous year,
compared to INR 1,120.99 Cr in the previous year. The volume increased to 1459,01 Cr in 2017-18
and the value jumped to INR 1,369,86 lakh Cr. While the numbers climbed at a faster pace in 2018-
19, with volume jumping to 2,343.40 Cr.
Conclusion
The Government is deliberately moving people to accept digital payments at present, if it has been
mandatory before, with social distancing and the COVID-19 crises. The offline-to-online transition in
payments has been around for a long time, but there has been an increased change in customer
behaviour in the latest lock-down scenario attributed to COVID-19. NPCI encouraged and urged
customers and all service providers of critical services to move to digital payment systems in order to
remain secure.
We're starting to see solutions coming up, and Merchants are heading further into the 'phygital world.'
And they don't have to go online entirely. People will be able to call any messaging mechanism in our
use to position orders or communicate by exchanging images, telling them what they want to purchase
and eventually digitally the payment will happen. Everyone goes out and picks up the items or delivers
them. After the lockdown, it's going to be a phase where we'll still have to be careful and take extra
precautions to stay safe until the world has really got rid of this situation. This period is all about
creating these solutions and innovating to meet these needs for the public, retailers and businesses.

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Journal of the Maharaja Sayajirao University of Baroda ISSN : 0025-0422

In the recent lockdown situation, along with RBI and the government, we are asking citizens to switch
to digital payment methods in order to remain protected. NPCI and other state governments are
ensuring that more providers of essential services are on the digital platform. The government has
taken action on social media to motivate the use of online payments and discourage the use of cash. In
their day-to-day transactions such as NEFT, IMPS, BBPS, which are available 24/7, the RBI and the
government continuously reiterate several digital payment options available to customers.
Through the use of smartphones, the digitization of the banking sector is bound to satisfy the increasing
expectations of the population. Indeed, it reduced human error and improved comfort. With the aid of
digital banking, most enterprises do not have to focus on the timing of banking operations.
Transactions will now be made even in odd hours.
References
 Dr.V.Sornaganesh and Dr.M.Chelladurai (2016) “Demonetization of Indian currency and
its impact on business environment” International Journal of Informative and Futuristic
Research Vol-4, Issue-3 November2016, PP5654-5662
 Aravind Kumar (2017) “Demonetisation and cashless banking transactions in India”
International Journal of new innovations in Engineering and Technology ISSN: 2321-6319,
Vol. No. 7, Issue No. 3, April 2017, Pp30-36
 Anthony Rahul Golden S (2017) “An Overview of Digitalization in Indian Banking
Sector”, Indo - Iranian Journal of Scientific Research (IIJSR), October -December, 2017. [6].
 https://www.crowdfundinsider.com
 https://www.moneycontrol.com
 https://www.thehindubusinesslin.com
 https://www.researchdive.com
 https://www.timesofindia.indiatimes.com
 https://www.indiaexpress.com
 https://www.expresscomputer.in
 https://www.outlookindia.com
 https://www.globaltrademay.com
 https://www.digipay.gov.com
 https://www.npci.org.in
 https://www.cashlessindia.gov.in

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