Digital Banking Boom: Card Payments, Mobile And Net Banking Payments Show Strong Growth

India's network for digital payments is increasing at a stronger pace, and mobile banking, net banking, and card-based transactions have all shown strong growth in the second half of 2024. The Worldline India Digital Payments Report 2H 2024 identifies the way consumers are increasingly shifting to digital banking products rather than making payments in cash. Growth is emerging from improving digital infrastructure, increasing smartphone penetration, and improving customer financial awareness.

Mobile Banking Transactions Rise 41 Per Cent

Mobile banking is becoming Indians' go-to mode of transaction, which is a testament to the increased adoption of smartphones to access banking facilities. Mobile banking transactions rose by 41 per cent to 88.54 billion transactions in the second half of 2024. Transaction value also reported a rise of 30 per cent to Rs 197.69 trillion.

The convenience of mobile banking and improved security features have led to more people and businesses using this payment method, money transfer, and other banking requirements. Simple-to-use mobile banking applications, usually backed by biometric authentication and real-time tracking of transactions, also increased consumer confidence.

Net Banking Transactions Increase 18 Per Cent

Net banking, which finds extensive use in high-value transactions, is also seen to be increasing steadily. Net banking transactions increased by 6 per cent towards the second half of 2024 to Rs 2.39 billion. More significantly even, the total value of net banking transactions increased 18 per cent to Rs 597.06 trillion, indicating that individuals and firms are conducting high-value transactions online in larger numbers.

Whereas mobile-based services are gaining traction, net banking retains its place for corporate payments, tax payments, and bill settlements owing to process orientation and other levels of security. The consistent growth in this segment points towards the fact that traditional banking is being adapted to meet digital technology rather than replaced by it.

Credit Card Usage Increases, Debit Card Usage Decreases

Card transactions like credit and prepaid cards also rose in the positive direction, while debit card usage declined. Card usage accounted for 4.1 billion in the second half of the year 2024, an 11 per cent increase from the previous year.

Credit card usage posted the fastest growth, rising 36 per cent to 2.42 billion transactions. This is an indicator of stronger consumption of credit-backed spending, especially for expensive commodities and services, online shopping, and travel expenses. Prepaid card transactions grew by 11 per cent to 860 million transactions, with customers increasingly using personalized payment instruments like forex cards and gift cards.

Conversely, debit card transactions fell by 29 per cent to 820 million. This aligns with the increasing number of UPI and other electronic payments that offer convenience without the card in hand.

Credit Cards Reign Supreme In Value Of Transactions

The second-half years' worth of card transactions for 2024 were Rs 13.64 trillion, out of which credit cards contributed Rs 10.76 trillion. This represented a 14 per cent value growth compared to the credit card transactions of the previous year. Value of prepaid card transactions increased by 38 per cent, and debit card transaction value declined by 16 per cent.

The reasons for greater usage of credit cards included reward schemes, interest-free months, and the ease to pay purchases through equated monthly installments (EMIs). Banks have also launched contactless forms of payments, which allow customers to perform card transactions.

Digital banking growth is one sign of a larger trend towards cashless transactions. As a result of government efforts toward financial inclusion, technological innovation in digital payments, and growing consumer education, digital banking adoption will continue to rise over the next two years, the report highlights.

As internet and mobile penetration expand, digital payment options will increase their popularity. Advances in the past few years indicate that even while mobile banking and credit card-based payments are presently driving the digitisation boom, net banking and prepaid cards also have a significant role to play towards India's future in finances.