A year after demonetization, digital payments grow in India

November 14, 2017 - One year after demonetization, the Indian economy has a significantly larger digital footprint. Following a decline earlier this year, India is once again converging toward a peer group of developing electronic payments markets, according to Visa’s Digital Payments Tracker for India, a composite index of public economic and connectivity metrics blended with Visa transaction data. 

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The payments landscape in India has transformed considerably over the past year. Obsolete notes were almost entirely returned to the central bank, but it appears that fewer new replacement notes were printed than those removed from the system, making alternative payment methods—primarily mobile and/or digital—necessary. 

Digital participation is increasing on both sides of the market: strong growth in the number of active debit/credit cards and mobile payments transactions indicate the new digital model is winning over consumers, while merchant acceptance points have doubled in some sectors and cities.  

Sources: Visa Business and Economic Insights analysis of industry data, including Haver Analytics. 

*About the India Demonetization Monitor 

Visa’s India Demonetization Monitor is a quarterly publication that follows India’s move to a “less cash” society, aiming to capture the tipping point when consumers are digitally-enabled and primed for a more dynamic payments infrastructure and economy. The newsletter includes a composite index of five key industry and economic indicators that track India’s progress as a digital payments market relative to other economies where digital payments are either still developing or already taking off. The Tracker combines the five indicators—GDP-to-cash ratio, deposits-to-cash ratio, food service venues accepting Visa-branded cards, Visa-branded cards’ share of personal consumption expenditures, and mobile phone subscriptions—with varying weights to create the composite index. 

Editorial Note: 
This will be the final issue of the India Demonetization Monitor. A new digital payments monitor for the Asia-Pacific region will be introduced in the first quarter of 2018, tracking Asia’s ongoing digital transformation.