Why The Nirav Modis Are So Common In PSB Banks?    Budget 2018: Why structural reforms may again be given a miss?    Capital First & IDFC Bank to Merge: Deja Vu for Mr. Vaidyanthan

The Good War, From Doklam To Digital: Can India Win The Later Against China?

The Doklam stand-off has created lot of heart burns, emotional outbursts, passionate speeches & posturing at both sides. From ‘we are ready for 2.5-pronged war’ to ‘slapping its own face’, the verbal dual has captured many a headline. There has been clamors for blocking Chinese goods as well and many are connecting Government recent steps of more checks & balances (ready security concerns) on Chinese companies in India to the month-long stand-off. While militarily & economically, China is stronger but India have also developed significantly in last few decades and 1962 can no longer be considered as benchmark of any future actions.

Amid this clamor, noises & hawkish statements, it will be interesting to understand where each of these countries stand in their digital war, a war with much better consequences. India’s current leadership has blown the bugle on digital a year or so back and there have been significant steps being taken on war footing to make rapid progress on the digital front. So, after a year of push & exuberance, where do we stand against our neighbor and what are our chances to beat them on the digital front? The country can surely take a lot of pride if it has done well & there is a sense of catching up & going past!

First let us baseline how the two countries stack up against each other. The below chart establishes 2 facts:

  1. Economically China has progressed quite well compared to India. 2nd only to USA on GDP (India stands 7th), China boasts of a much higher GDP and its per-capita is more than 4.5X of India.
  2. China was also much better off on ‘Cashless Quotient’ of Mastercard Digital Index. China is at 55% compared to a much lower 32% of India. This is more than a year back when our digital ‘push came to a shove’

Now let us consider ‘Digital Penetration’ of both these countries in this 2nd chart of ours. The chart again reflects that China is miles ahead in the race to digitalization.

So, is this good enough to pronounce the result and declare China as the winner? Not yet, baseline surely China is way-ahead but in last year who has done a better job? Now this is where the excitement begins!

Non-cash Transaction Performance

It is no wonder that non-cash transaction volume & value is both much higher for China & is reflection of why it is at much higher position in the Mastercard ‘Cashless Quotient’. While both has grown significantly in last year, India scores higher in the total ‘Non-Cash Payments (USD Tn)’ growth. At more than 24%, it beats China’s 6.9% handsomely! The high growth in value transacted can probably be attributed to the wider use of digital across broader spectrum of payments during & post demonetization.

Mobile Payments

Mobile payment density is much higher in China. Contribution of mobile towards overall non-cash payments is at a much higher maturity in China compared to India. But where India can hold its head high is the stupendous growth it has achieved in the last 1 year, clocking nearly 2-5X higher growth rate. Such high growth rate is probably outcome of number of factors including demonetization, higher digital push, success of likes of PaytM, Mobikwik and launch of new mobile driven payments mechanism e.g. UPI, BHIM etc by GoI. But the comparison also shows the vast potential that mobile payment holds for India

Bank Cards

The similarity in story continues for Bank cards as well. While in absolute numbers, China is well ahead, India has done great in terms of growth achieved in last 1 year.

In terms of infrastructure enablers that are critical to wider adoption & usage of cards, China has a better all-round performance. The data also reflects slowing down of ATM in India as ‘Bank cards served by an ATM’ has grown quite significantly in last year. But the GoI prod to banks to invest in more POS because that’s where the consumption through bank cards happens, has gone down well with increase in density of POS reflected in the decrease in the bank cards served by a POS.

In actual usage of cards, quite understandably the bank card usage for consumption (overall & per card) for India has been much better than China in terms of growth clocked.

*- For India, it includes all ATM transactions reported by RBI and may be slightly distorted if CDM (Cash Deposit Machine) transactions is also part of this.

**- India data is that of POS data as reported by RBI. This may also include online payments through cards as per the following excerpt from RBI website (‘The PoS for accepting card payments also include online payment gateways…’; https://www.rbi.org.in/scripts/paymentsystems_um.aspx)

Innovation in Banking Payment

In Indian context, players like PaytM revolutionized the payment ecosystem in last couple of years. It forced many universal banks to sit up & scramble for transformation. While we may bask in glory on that revolution of payment landscape, China which kick started the same a few years ago, on the back of Alipay and Tencent (Wechat), have scaled much greater heights.

Regulator Activism

The respective banking regulator and the governments have also been working closely together to strengthen the digital ecosystem. Following table illustrates a few key enablers that have been acted upon by respective countries. There is a similarity in approach and also in areas of concerns.


In its current situation, China is significantly ahead of India in its digital journey but India has registered significant leap in last 1 year which gives a confidence that if this resurgence continues, India can catch up with China as well in a few years. The innovation in payment ecosystem, introduction of payment banks, rationalization of payment transaction fees, more safeguards on digital payment methods, strong awareness campaigns, incentives for digital payments are a few enablers for digital adoption. India has tasted significant success in last 1 year leveraging nearly all these enablers and this needs to be continued to leverage the initial success and build a strong foundation to achieve a more cashless, digital centric financial ecosystem. While war mongers focus on the Doklam stand-off and possible military interventions, let us pray a more pragmatic Government in both countries to focus their efforts on this ‘other war’ on digital. Here a looser will also be a winner!



  1. China Payment System Development Report 2016
  2. Social Networks, e-Commerce Platforms, and the Growth of Digital Payment Ecosystems in China: What It Means for Other Countries, April 2017
  3. http://bankinnovation.net/2017/04/alipay-wechat-processed-3-trillion-in-2016/
  4. https://data.worldbank.org/data-catalog/GDP-ranking-table
  5. http://www.moneycontrol.com/news/business/startup/paytmpath-to3610-bn-transaction-volume-ceo-1002443.html
  6. RBI
    1. Bank-wise Mobile Banking Transactions data for respective months
    2. No. 43: Payment System Indicators
    3. ATM & Card Statistics
  8. MasterCard Advisors’ Cashless Journey, Sep 2013
  9. For India, raw data was sourced from RBI statistics/ publications and other sources mentioned above, while calculation was done by Randomwalks to derive the value for the different metrics.



Leave a Reply

Name *
Email *