Digital payment solutions see unprecedented growth in India, CIO News, ET CIO

India has been extremely keen to fully embrace digital payment systems and has made leaps and bounds in that direction.

Over the past three years, digital payment transactions have seen unprecedented growth in India. Simple and convenient digital payment methods, such as Bharat Interface for Money-Unified Payments Interface (BHIM-UPI); Immediate Payment Service (IMPS); Prepaid Payment Instruments (PPI) and the National Electronic Toll System (NETC) have experienced substantial growth and have transformed the digital payment ecosystem by increasing person-to-person (P2P) as well as person-to-merchant ( P2M).

At the same time, pre-existing payment methods such as debit cards, credit cards, national electronic funds transfer (NEFT) and real-time gross settlement (RTGS) have also grown at a rapid pace.

BHIM-UPI has become users’ preferred payment method. The Government of India has also launched e-RUPI digital payment solution, a cashless and contactless instrument for digital payment, which is expected to play a huge role in making Direct Benefit Transfer (DBT) more efficient in digital transactions in the country. All of these facilities together have created a robust ecosystem for a digital financial economy.

Ensuring that more than 1.3 billion people benefit from digital payment solutions is no easy task, but the Indian government is leaving no stone unturned to achieve this goal.

One of Digital India’s main goals is to achieve “Faceless, Paperless, Cashless” status. The Government of India has given highest priority to promoting digital payments to bring every segment of our country under the formal fold of digital payment services.

UPI has been called a breakthrough product in the payment ecosystem. Launched in 2016, it has established itself as one of the country’s most popular tools for conducting 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 app, merging multiple banking features, seamless fund routing, and merchant payments into a single hood.

UPI has come a long way in making digital payments a habit and firmly setting India on the path to a cashless economy. In the month of August 2022 alone, 346 banks were live on the UPI interface, with 6.58 billion financial transactions made with a total value of almost Rs 10.73 lakh crore.

UPI currently accounts for well over 40% of all digital transactions made in India. It has given a boost to small businesses and street vendors as it enables fast and secure interbank transactions even for considerably small amounts. It also facilitates rapid money transfers for migrant workers. The technology is convenient to use as it requires minimal physical intervention, making it possible to transfer money simply by scanning a QR code. UPI has also been a lifesaver during the Covid-19 pandemic, with adoption growing rapidly due to its ability to enable 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 shown great affinity for embracing new technologies. While some developed countries are facing problems due to inadequate digital infrastructure to transfer money to their citizens’ accounts, India has emerged as a leader in creating digital assets, which can serve as example to many other countries.

Furthermore, the Indian government is sparing no effort to make India a global leader in the field of digital payment systems and help it achieve the status of one of the most efficient payment markets in the world.

Going forward, emerging Fin-Techs will play a key role in furthering the growth of digital transactions by enabling transparent, secure, fast and cost-effective mechanisms that benefit the entire digital payments ecosystem.

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