With the onset of the second wave of COVID-19, India's digital payments and ATM withdrawals both plunged during the months of April and May. This was particularly because of the state-wise lockdowns, which removed the demand from the economy.
In addition to this, except UPI, digital payment channels witnessed a 30-40 per cent decline in value as compared to the month of March. At the same time, ATM cash withdrawals dropped by 64 per cent.
The United Payments Interface (UPI), which received massive popularity and usage after the onset of the pandemic, saw a marginal decline of 2-2.5 per cent in May 2021 compared to its 5.04 lakh crore value transacted through it in March 2021, reported The New Indian Express.
UPI stood at 2.53 billion monthly transactions in May, which went down from 2.73 billion during March 2021.
In addition to this, during FY21, digital payments also saw a 13.4 per cent drop in value terms, according to the RBI's Annual Report of FY21.
The digital payments which is led by lower growth in Real Time Gross Settlement (RTGS) system also saw a decrease in transactions of paper-based instruments. This was due to the halt of several economic activities in the nation.
The RTGS had a severe impact due to the second wave, with transactions value declining by 35 per cent in May 2020 from March 2020, ₹83.6 lakh crore. Apart from this, the payments went down from 12.3 million in May to 20.2 million in March.
The National Electronic Funds Transfer transactions (NEFT) fell by 40 per cent in its value to ₹ 18.19 lakh crore while in terms of volume, they dropped from 348 million in March to 256.3 million in May. The plunge in credit and debit cards transactions during this period in value terms was 25 and 35 per cent respectively.
Lastly, for ATM cash withdrawals, the contraction was 64 per cent. The total number of cash withdrawals also witnessed a dip to 2.5 billion in May from 3.5 billion in March 2021. Nevertheless, the Aadhar enabled Payments System saw withdrawals increasing from 750 million in March to 824 million in May, although the value fell by 88%.