New Delhi: India has been extremely keen on adopting digital payment system fully and has been making giant leaps towards it.
During the last three years, digital payment transactions have registered unprecedented growth in India. Easy and convenient modes of digital payment, such as Bharat Interface for Money-Unified Payments Interface (BHIM-UPI); Immediate Payment Service (IMPS); pre-paid payment instruments (PPIs) and National Electronic Toll Collection (NETC) system have registered substantial growth and have transformed digital payment ecosystem by increasing Person-to- Person (P2P) as well as Person-to-Merchant (P2M) payments.
At the same time, pre-existing payment modes such as debit cards, credit cards, National Electronic Funds Transfer (NEFT) and Real-Time Gross Settlement (RTGS) have also grown at a fast pace.
BHIM-UPI has emerged as the preferred payment mode of users. The Government of India also launched the digital payment solution e-RUPI, a cashless and contactless instrument for digital payment, which is expected to play a huge role in making Direct Benefit Transfer (DBT) more effective in digital transactions in the country. All these facilities together have created a robust ecosystem for a digital finance economy.
Getting a whopping over 1.3 billion people under the ambit of digital payment solutions is not an easy task but the Indian government is not leaving any stone unturned to achieve that milestone.
One of the major objectives of Digital India is to achieve “Faceless, Paperless, Cashless” status. The promotion of digital payments has been accorded the highest priority by the Government of India to bring each and every segment of our country under the formal fold of digital payment services.
UPI has been termed a revolutionary product in the payment ecosystem. Launched in 2016, it has emerged as one of the most popular tools in the country for carrying out digital transactions. UPI is an instant payment system developed by the National Payments Corporation of India (NPCI). It powers multiple bank accounts into a single mobile application, merging several banking features, seamless fund routing and merchant payments into one hood.
UPI has gone a long way in making digital payments a habit, and in firmly placing India on the track toward a cashless economy. In the month of August 2022 alone, 346 banks were live on the UPI interface, with 6.58 billion financial transactions being carried out for a total value of nearly Rs 10.73 lakh crore.
UPI currently constitutes well over 40 per cent of all digital transactions taking place in India. It has given a boost to small businesses and street vendors as it enables fast and secure bank-to-bank transactions even for considerably small amounts. It also facilitates quick money transfers for migrant workers. The technology is convenient to use as it requires minimum physical intervention, making it possible to transfer money simply by scanning a QR code. UPI has also been a savior during the Covid-19 pandemic, with its adoption expanding rapidly due to its ability to allow easy, contactless transactions.
There is no doubt that the digital payment landscape in India has been transformed. Complementing the efforts of the Government, the people of India have also displayed a great affinity for embracing new technologies. While some of the developed countries are facing problems due to inadequate digital infrastructure for transferring money to the accounts of their citizens, India has emerged as a leader in the creation of digital assets, which can serve as an example to many other nations.
Further, the Government of India is leaving no stone unturned to make India a global leader in the arena of digital payment systems and help it attain the status of one of the most efficient payments markets in the world.
Going forward, the emerging Fin-Techs will play a key role in the further growth of digital transactions by enabling transparent, secure, swift and cost-effective mechanisms benefiting the entire digital payments ecosystem.