Credit and debit cards are traditionally considered to be the pioneers of non-cash payments. This is how the term plastic money came into existence.The Indian digital payment revolution seems to be taking a different route.Mobile phones have become a bigger source of non-cash payment methods in retail transactions than customers swiping their cards at Point of Sale (POS) machines. And the implementation of Goods and Services Tax (GST), not demonetization, seems to have been a bigger and perhaps sustainable catalyst for digital payments in the Indian economy.
Sure, the cash-squeeze after demonetisation forced people to shift to non-cash methods for carrying out their day to day transactions. ATM withdrawals fell drastically while the value of retail digital payment methods increased. The latter category includes the following: POS transactions through credit cards and debit cards, Unified Payments Interface (UPI), Unstructured Supplementary Service Data (USSD), Prepaid Payment Instruments (PPI) and Mobile Banking. However, as cash came back in the system, the growth in digital payments decelerated. ATM withdrawals once again surpassed digital payments by July 2017.This was also the month when GST was implemented. Interestingly, the trend reversed in the post-GST period. Digital payments started increasing, and this time in a more consistent manner.