In times of social distancing, most Indians stay away from cash purchases this Diwali | Economic Times

Kolkata: Cash transactions this festive season have taken a back seat. The share of cash transactions fell to around 25% on India’s two largest ecommerce marketplaces, Amazon and Flipkart, from 60-65% last year Diwali, with payments made through digital modes like the Unified Payments Interface (UPI) and cards taking the lead.At leading brick-and-mortar retail chains including Reliance Retail, Tata-owned Croma, Vijay Sales and Sangeetha Mobiles, too, debit and credit cards, wallets, UPI and consumer finance together have become the choice for payment by consumers. 79333712The share of cash transactions in neighbourhood cell-phone outlets have also for the first time come down to less than half of total purchases, said Arvinder Khurana, president of the All India Mobile Retailers Association, which represents more than 150,000 small stores.This shift is aided by the pandemic, cashback or instant discount offers on cards, UPI and wallets; increase in smartphone penetration and the government announcement allowing employees to avail of the LTC benefit tax-free by purchasing goods paid through the digital mode.Some consumers prefer to not handle cash, Croma’s marketing head Ritesh Ghosal said. There is a larger number of people now paying via EMI (probably to preserve cash), which in itself is digital. Also, people in the cash economy are probably hit harder by the pandemic and are not spending, which has skewed the share of digital payments, he said.For the ecommerce marketplaces, this is the first time on record non-cash payments have taken the lead during the festive season. On Flipkart, there has been a 68% increase in digital transactions compared with the previous festive season, with UPI, debit card and credit cards being the top payment instruments used on the platform, a spokesperson said. This is despite Flipkart reporting the highest number of first-time Internet and ecommerce users, even from small towns.An Amazon Pay spokesperson said during the festive sale period, it disbursed credit of more than ₹2,700 crore with 140,000 new-to-credit customers, 28% higher than last year. The person said this year two out of every five shoppers on Amazon had access to credit.The rise in digital payment in India comes at a time when cash volume with the public is at the highest on record. As per latest Reserve Bank of India data, currency with public was ₹26.19 lakh crore as on October 23, up 11.5% from March this year and 54% from October 28, 2016, just days before the demonetisation of high-value currency notes.Bankers said people were maintaining liquidity and some of the cash was flowing into transactions in unorganised sectors. They also said the shift to ecommerce transactions was fuelling digital payment adoption. Kotak Mahindra Bank chief digital officer Deepak Sharma said the rise of ecommerce platforms amid the Covid pandemic had led to a surge in UPI transactions, net banking and usage of cards. A surge in QR-scan facility and pay versus traditional card plus point-of-sales usage at small merchant outlets also led to higher adoption of digital payment, he said.Axis Bank digital banking head Sameer Shetty said the share of online spending had moved up from 36% in the pre-Covid period to 41% in recent months. Cards and UPI are driving digital adoption.