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NEFT money transfer to be free: RBI move to make digital payments cheaper for these accounts

FE Bureau
Transactions via NEFT, saving accounts, QR codes, FASTags, NEFT transactions, digital transactions

The Reserve Bank of India (RBI) on Friday mandated banks not to charge savings account customers for online transactions in the NEFT system with effect from January 2020. The central bank announced several other measures that would boost digital payments, including the operationalisation of the Acceptance Development Fund, which aims to improve the infrastructure to accept cashless payments in tier-III to tier-VI locations. A committee has also been created by the RBI to assess the possibility of converging QR codes, now separately created by individual payment apps.

Further, a proposal to permit linking of all authorised payment systems including non-bank prepaid payment instruments (PPIs), cards and UPI with National Electronic Toll Collection's FASTags is also on the anvil. This would facilitate the use of FASTags for parking, fuel and other such purposes.

The central bank also said that the volume of transactions through Unified Payments Interface (UPI) witnessed a year-on-year (y-o-y) growth of 263% to 874 crore in September. During the period, the volume of NEFT transactions hit 252 crore, witnessing a y-o-y growth of 20%.

Digital payments constituted as much as 96% of total non-cash retail payments, which also includes transactions via debit and credit cards, cheques and automated clearing house payments. The volume of retail digital transactions have been witnessing a rise of 30% compound annual growth rate (CAGR) from 680 crore in October 2015-September 2016 to reach 2,846 crore in October 2018-September 2019. In terms of value of digital transactions, retail digital transactions grew from Rs 113 lakh crore to Rs 302 lakh crore, witnessing a CAGR of 39%.

According to the RBI data on electronic payment systems available on the National Payments Corporation of India (NPCI) website, the amount of digital transactions saw a spurt in November 2016 when demonetisation was announced, from 67.15 crore to 97.55 crore in December 2016. Later, the numbers came down to 76.3 crore in February 2017, and has been rising gradually since. The volume of transactions hit the 1 billion-mark in December 2017 at 1.06 billion.

As per data from Razorpay, among UPI payment apps, Google Pay has a market share of 61.2% in October, followed by PhonePe at 24.9%, and Paytm at 5.8%. BHIM (Bharat Interface for Money), developed by NPCI, had a market share of 3.66%.