Digital payments in India - how demonetization and COVID-19 shaped adoption?

Abstract

In this article, we study the adoption of digital payment technologies in India over the last decade. Using a quasi-experimental design, the study assesses if the demonetization exercise of 2016 led to an enhanced adoption of digital payments. We further study the evolution of digital payment usage in the wake of the COVID-19 pandemic. The study finds insufficient evidence supporting the claim that demonetization led to an enhanced adoption of digital channels (measured by the value of transactions as a percentage of money supply). On the other hand, the lockdown in the wake of the first wave of the COVID-19 pandemic spurred the adoption of some new-age payment channels.