Development of digital infrastructure driving e-payments in India
Digital payments in India are witnessing thriving growth with a compound annual growth rate (CAGR) of 51.17% and the volume of payments is expected to reach 96.5 trillion transactions by 2023, according to global market research firm Research On Global Markets. Market research studies also reveal that the boom in e-payments has led to a significant increase in the number of merchants adopting digital payments, with the number of locations accepting digital payments crossing more than 10 million in 2018. The ease of payments, ubiquity and convenience are some of the factors which have led to extensive adoption of the e-payment solutions across the country.
Mobile payments emerge as the most prominent growth driver
The growing prominence of mobile payments, mostly in the form of Unified Payments Interface (UPI)-based real time payments, has added to the popularity of e-payments solutions in India. The development of digital infrastructure in the country is leading to the creation of a robust technological ecosystem for the mobile payments industry of India. Some factors such as inter-operability, and possibility of origination across different platforms such as mobile wallets, are further fuelling the growth of UPI transactions. The volume of UPI transactions have increased at a CAGR of 246% in 2018-19. Apart from UPI, mobile payments have witnessed a major shift in the past five years with the proliferation of other e-payment solutions like mobile wallets, Bharat Interface for Money (BHIM), BharatQR and Unstructured Supplementary Service Data (USSD).
Government efforts offer significant boost for e-payment solutions
As India is striving toward establishing itself as a digital superpower, the government is coming to terms with the fact that their vision of “Digital India” cannot be complete without digitizing the economy in the country. However, a cashless economy is heavily dependent on the setting up a robust digital infrastructure, and the government is striving hard in this endeavour. So, the government in collaboration with the players operating in the e-payment solutions market in India are pushing for a cashless economy by implementing digital payment methods at a reduced cost.
Innovative start-ups are increasingly disrupting the existing digital payments landscape with payment technologies that entail low cost adoption models. There are some innovative solutions that are currently looking to resolve this technology-utility gap to make digital payments accessible.
Dynamic start-ups are also leveraging advanced technologies that use unconventional modes of communication – like sound for instance – to facilitate digital payments. Since all mobile phones are capable of producing sound, they can be used for digital payments without the need of the internet, cameras, or expensive equipment, which are required for mobile wallets or QR code systems.
Government initiatives toward the development of these cutting-edge, novel technologies and their systematic penetration among the masses is expected to lead to a prolific cashless economy. The strategic shift toward developing an ecosystem that facilitates the adoption of compelling e-payment solutions will further encourage Indians to embrace a cashless economy.