Rupa Subramanya, writing for ORF Online:

The data for PoS show that December 2016 saw a whopping 84 percent increase in PoS as compared to the trend and January 2017 saw a big 72 percent increase above trend. Again, while it’s true there’s a drop in absolute level, such two data point analysis misses the fact that PoS is still way above the pre-demonetisation trend.

This is part of Rupa’s ongoing research into digitisation of the Indian economy overall, including as an effect of demonetization.

As I have also said before, we are still months away from the ‘final’ picture. The general expectation, and the data seems aligned with this, is the net usage pattern, once the dust well and truly settles will be a larger digitisation of the Indian economy by more than just a few percentage points.

Bank transactions such as NEFT, IMPS are seeing double digit percentage increases, the only question to be raised is how much of this is force, and how much of it preference.

She also raises causes for concern:

…admittedly anecdotal evidence suggests that after an initial adoption of digital payments methods, some smaller merchants and traders are now reverting to cash, since the liquidity crunch has largely eased. By the same token, some consumers are now reverting to cash, which is back in ATMs.

Rupa is right in suggesting that this isn’t about trying to return to a ‘black’ economy per se, but issues like “high frequency of failed transactions, network issues and high transaction costs” are certainly making cash feel more convenient. There will also be a more general pushback out of desire to return to old habits now that the ‘inconvenience’ of being forced to use digital payments is over.

BHIM is making good strides to counter this problem (17 million downloads and transactions volumes going up), but digitisation will be well and truly home once banks decide to make it easier to do so. The latest series of bank transacation charges will only put off consumers.

Until then, cash will always feel and be the ‘cheaper’ option.