The ongoing spread of COVID-19 has become one of the biggest threats to the global economy and financial markets. To contain the impact of the coronavirus outbreak, India, like many countries across the globe, is taking several measures, including a nationwide lockdown; limiting movement of the entire population; shutting down public places and transport; and urging the public to stay indoors, maintain social distance, and work from home. The resulting economic disruption is huge and the shortterm decline in activity for businesses, both large and small, considerable.
The adverse effects of the COVID-19 pandemic are trickling down to major sectors of the Indian economy, with manufacturing, auto, retail, aviation and hospitality bearing the brunt of the lockdown. This in turn has affected fast-growing digital payments which are closely linked to the aforementioned sectors. Shut shops, travel bans and reduced discretionary spends by consumers (on dining out, movies and entertainment and so on) are further negatively impacting digital payments.
However, Digital payment transactions through the Unified Payment Interface (UPI), cards and mobile wallets have made a near V-shaped recovery this month. Volumes had plunged nearly 60% in April after a countrywide lockdown to arrest the spread of the Covid-19 pandemic.
Weighing in with their opinions over the course of a study of 500 industry professionals, an overwhelming majority of 81% of respondents agreed that Covid-19 has increased the adoption of digital payments over cash. Due to the nature of Covid disease, touchless transactions have been encouraged and people have responded by switching to digital payment methods all over India.