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Digital Payments Index
Context:
The Reserve Bank of India (RBI) has reported a significant rise in its Digital Payments Index (DPI), reflecting the rapid adoption of digital transactions in the country.
Key Highlights:
- Latest Index Value (September 2024): The RBI-DPI index for September 2024 stands at 465.33, marking an increase from 445.5 in March 2024.
- Announcement Date: The March 2024 index value was announced on July 26, 2024.
- Growth Drivers: The increase in the index is attributed to the continued expansion of payment infrastructure and enhanced payment performance across the country. The central bank highlighted that the Unified Payments Interface (UPI) has been the most significant contributor to this growth.
UPI Dominates India’s Digital Payments Landscape
- The RBI highlighted in a report that UPI has been the most significant contributor to digital payment growth due to its ease of use and widespread adoption.
- UPI’s Dominance in Digital Payments: UPI’s share in India’s total digital payments surged from 34% in 2019 to 83% in 2024. The Compound Annual Growth Rate (CAGR) of UPI transactions over the last five years stood at 74%.
- Decline of Other Payment Systems: The collective share of RTGS, NEFT, IMPS, credit cards, and debit cards in digital payment volumes declined from 66% in 2019 to just 17% in 2024.
- Exponential Growth in UPI Transaction Volume and Value: UPI transaction volume skyrocketed from 375 crore in 2018 to 17,221 crore in 2024.
- The total value of UPI transactions surged from ₹25.86 lakh crore in 2018 to ₹246.83 lakh crore in 2024.
- The five-year CAGR for UPI transactions is 89.3% in volume and 86.5% in value.
Introduction of RBI-DPI
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- Launched in January 2021, the index measures the extent of digitisation in payments across India. The RBI has been publishing the RBI-DPI semi-annually since January 2021, with a four-month delay.
- The base period for the index is March 2018, with a baseline score of 100.
- Key Parameters:
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- Payment Enablers – 25% weightage
- Demand-Side Payment Infrastructure – 10% weightage
- Supply-Side Payment Infrastructure – 10% weightage
- Payment Performance – 45% weightage
- Consumer Centricity – 5% weightage
- Measurement Approach: Each parameter includes multiple sub-parameters and measurable indicators to assess the penetration and deepening of digital payments in the country.
The continuous rise in the RBI-DPI underscores India’s growing shift toward a digital-first economy, with robust infrastructure and improved payment mechanisms driving the transformation.
