Cyber Security and Cost Efficiency are Essential to Sustain the Digital Payments: RBI
Cyber security, customer protection and cost efficiency are essential to sustain the digital payments movement accelerated by the Covid pandemic, according to the RBI.
The use of cash for transactions has declined and is increasingly being replaced by digital payment methods, although the role of cash as a store of value remains intact. Digital Payment Transactions in India. : Unraveling the Paradoxes of Currency Demand.
In line with global evidence, the pandemic has caused a temporary increase in the demand for currency in India, mainly due to contingencies and retention of values.
Sustaining the momentum of digital payments started by the pandemic requires a concerted effort to ensure the cost-effectiveness of payment methods and the appropriate acceptance infrastructure on both the demand side (consumers) and the supply side (merchants and intermediaries) and ensure universal access to enablers such as smartphones and internet connectivity.
Sakshi Awasthy, Rekha Misra and Sarat Dhal, all associated with RBI's Department of Economic and Policy Research (DEPR), further noted that efforts are needed to strengthen financial inclusion and literacy and ensure cyber security and customer protection.
The success of digitization goes beyond simply replacing cash; it has wider implications for economic growth, the development of financial markets, household financial well-being, and effective management
It also plays an important role in facilitating transactions between the formal and informal sectors and with economically marginalized and digitally illiterate populations.
In addition, the use and adoption of digital payments are still concentrated in regions with a higher level of development. The success of digitization goes beyond simply replacing cash; it has wider implications for economic growth, the development of financial markets, household financial well-being, and effective management.