Data: Average Transaction Value of NEFT & RTGS Fell Significantly in the Last Five years
Sai Krishna Muthyanolla
October 13, 2022
While various modes of online money transfers & digital payments have witnessed exponential growth in the last decade or so, the average transaction value has fallen for NEFT & RTGS transactions. Compared to the high in 2018, the average transaction value of NEFT & RTGS fell by more than 25%.
Banking and payment systems are vital for the functioning of a nation’s economy. The efficiency with which these systems perform their expected tasks determines their operative capabilities and level of adoption. Further, these systems must cater to the different needs of consumers. Accordingly, governments adopt various mechanisms to fulfil the objectives of both the consumers as well as the banking system. Multiple digital payment systems have been introduced in India over the years. We look at the various types of fund transfer mechanisms in India and their trends in terms of transaction volume & value.
Fund transfer (payment systems) ecosystem in India
Emerging technologies have caused disruptions across various sectors. The financial sector and particularly, money transfer is one area where such disruption is evident. Transfer of money through digital modes brings with it a number of challenges in terms of security, transfer limits, processing durations and cost of money transfer. It becomes complex to accommodate all these into a single system. Hence, central banks devise multiple mechanisms to cater to the different needs of consumers.
In India, there are four broad types of fund transfer mechanisms, with unique features. Below is the gist of these four.
IMPS and UPI transfers are on an exponential rise
The data from 2012 clearly indicates the changing patterns of the fund transfer mechanisms. Some clear patterns emerge when looking at such data.
The trend is similar to the volume of transactions through different payment modes.
Average size of transactions through NEFT and RTGS is declining
While the volume and value of transactions offer a fair idea of the dynamics of different payment mechanisms, the average size of the transaction provides a clearer picture of the utility of the payment systems. This is obtained by dividing the total value of the transaction by the total volume of transactions. Data indicates that the average size of transactions for credit cards and debit cards has gone up in 2021, while IMPS and UPI are maintaining steady growth. However, the average transaction size for NEFT and RTGS has been declining for the past couple of years.
Positive, but a declining growth rate of value of transactions
On plotting the respective growth trends for each of these transfer modes, it is observed that:
While all the payment modes more or less registered positive growth, the quantum of such growth is declining. Also, one must be careful in looking at the growth rate for 2021 as many payment modes registered reduced values in 2020 due to the pandemic. Any increase/decrease for 2021 must be evaluated keeping 2020 in mind.
Average transaction size growth rate
While it is important to look at the cumulative growth rates, it is equally important to focus on the average ticket/transaction size. This trend would tell us whether volume or value is the driving factor behind growth in cumulative value.  On analysing the trend of growth in average ticket size, it is observed that,
Featured Image: Banking and payment systems