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Context:

The Reserve Bank of India’s (RBI) released digital payments index (DPI).

About The Digital Payments Index (DPI)

The Digital Payments Index (DPI) released by the RBI is a comprehensive tool launched in January 2021 to measure the stretch of digitization of payments across India.

The base year for the index is March 2018, with a score set at 100.

The latest RBI-DPI score, as of September 2024, stands at 465.33, up from 445.5 in March 2024. This increase reflects the rapid adoption of digital payments in India.

The growth is pushed by improvements in payment infrastructure, payment performance, and the overall expansion of digital payment systems across the country.  

What are the Parameters of the RBI-DPI?

The RBI-DPI is based on five broad parameters, each with a specific weightage:

• Payment Enablers (25%): Factors that facilitate digital payments, such as internet penetration, mobile connectivity, and regulatory support.
• Demand-Side Infrastructure (10%): Infrastructure that supports consumers, like the availability of digital payment apps and user-friendly interfaces.
• Supply-Side Infrastructure (15%): Infrastructure that supports businesses, such as Point-of-Sale (POS) terminals and payment gateways.
• Payment Performance (45%): Metrics like transaction volume, value, and frequency of digital payments.
• Consumer Centricity (5%): Measures how consumer-friendly and accessible digital payment systems are.

  What are the challenges in further increasing the RBI-DPI score?

Despite the rapid growth, challenges remain in increasing the RBI-DPI score:

• Limited digital infrastructure and awareness in rural areas.
• Increasing incidents of fraud and data breaches.
• Lack of knowledge about digital payment tools among certain demographics.
• Incompatibility between different payment platforms.

Way Forward

• Increase internet and mobile connectivity in rural areas.
• Implement advanced cybersecurity measures and educate users about safe practices.
• Launch awareness campaigns and training programs.
• Develop unified standards for seamless transactions across platforms.

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DIGITAL PAYMENTS INDEX

Source: 

BUSINESS-STANDARD