Digital transactions grew at a frenetic pace; glitches rose too

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Though digital transactions grew at a frenetic pace in the country, thanks to the pandemic, glitches grew too, averaging nearly 2.5% of the transactions that were mainly attributed to four types, according to National Payments Corporation of India (NPCI).

Earlier in the week, a report by fintech company Razorpay revealed that in Q4 of FY 21, digital transactions in India grew at a rate of 76% compared to the same period in FY20. However, the rate of failed transactions also inched up from 2.3% to 2.49% of the total transactions between April and November 2020 as compared to the same period in 2019.

The troubles that customers face mostly centre around authentication failures, double debit from the account and delay in reversing debits are the main headache of the FinTech firms.

Two other hurdles in the path of digital transactions are low internet coverage and poor internet connection in many areas.

A recent study by Bloomberg predicted the number of digital transactions would increase two fold within a period of two years.

In FY21 the number of digital transactions stood at around 500 crore. It might rise to 1,003 crore in FY23. This study also predicted that in FY25 the total number of transactions would go up to 1,700 crore.

The study also reveals that till October 2020 only 10-12% of the country’s population are digitally literate, which means out of a population of 130 crore, the number of digitally literates is between 13 and 15.6 crore.

A national digital literacy mission study also revealed that a 360 degree holistic approach on the part of the government is required to bring more people under the ambit of digital transaction.

A recent study by PriceWaterhouseCoopers revealed that almost all the leading banks are facing some degree of outage during digital transactions. It mentions that between 1st April 2020 and 2nd April 2021 customers of the State Bank of India faced outage 68 times. In other words, SBI customers faced glitches 5.5 times a month.

Private banks were better placed on this parameter. ICICI Bank customers faced it 21 times a year. The number for an average HDFC customer was 18 times over a period of one year.

As many as 10 of India’s top 30 banks recorded a 3-3.4% failure in transactions over the digital payments backbone only in September 2020, according to the PwC report. “It is as if the living room was kept clean but the attic was messy,” says Vivek Belgavi, a partner and leader of the FinTech practice at PwC India.

“Banks need to reprioritize and fix their core infrastructure. The need of the hour is intent and speed to do so,” said Vivek Belgavi.

The Reserve Bank of India, the nation’s banking regulator has already questioned SBI and HDFC Bank about the reported glitches on its internet banking and mobile apps, according to people familiar with the matter. RBI governor Shaktikanta Das has urged banks to strengthen cyber security and tech infrastructure.