Manya Rathore
Research expert covering India
Digital payments in India - statistics & facts
India’s burgeoning cashless society is a culmination of various factors such as the introduction of the Unified Payment Interface, and the emergence of e-wallet players, further intensified by the events like demonetization and Corona pandemic. Paying for a hotel room with a credit card, getting a new TV on a debit card, or paying for vegetables on the street via a mobile wallet: digital payments are omnipresent in the everyday life of Indians and have dramatically changed consumer behavior in the country. Although cash remains the king, as evident in high currency in circulation (CIC), the digital payment ecosystem grew exponentially in the last few years. In the financial year 2023, almost 114 billion digital transactions were recorded across the country.
RuPay was introduced as the domestic alternative to Mastercard, Visa, and UnionPay. The latter was also part of the ambitious Pradhan Mantri Jan Dhan Yojana (PMJDY) that aims at introducing digital payments and financial services to the largely unbanked sections of society. BHIM-UPI has emerged as the key mode of digital payment among the Indian population.
The ongoing trend in digital payments and investments in FinTech innovations resulted in a highly competitive market, especially in the e-wallet segment. Paytm, Amazon Pay and Pay Pal have emerged as popular fintech companies in the digital payment segment. These fintechs are slowly moving towards localizing their product by providing services in multiple Indian languages.
Digital payments ecosystem
Digital payments are a key rubric of the “Faceless, Paperless, and Cashless” objective of the Digital India campaign. The National Payments Corporation of India (NPCI), founded as an initiative by the Reserve Bank of India (RBI) and the Indian Banks’ Association, provides the crucial infrastructure for several payment systems. Key modes of digital payment transactions in India facilitated by NPCI, RBI, and banks include 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 in addition to pre-existing payment modes such as debit cards, credit cards, National Electronic Funds Transfer (NEFT) and Real-Time Gross Settlement (RTGS).RuPay was introduced as the domestic alternative to Mastercard, Visa, and UnionPay. The latter was also part of the ambitious Pradhan Mantri Jan Dhan Yojana (PMJDY) that aims at introducing digital payments and financial services to the largely unbanked sections of society. BHIM-UPI has emerged as the key mode of digital payment among the Indian population.
The ongoing trend in digital payments and investments in FinTech innovations resulted in a highly competitive market, especially in the e-wallet segment. Paytm, Amazon Pay and Pay Pal have emerged as popular fintech companies in the digital payment segment. These fintechs are slowly moving towards localizing their product by providing services in multiple Indian languages.
Challenges and way ahead
Certain structural challenges that hinder the growth of digital payments include security concerns, data breaches, poor internet connectivity, and failures on payment platforms. These factors weaken consumer faith in digital payments. However, there is hope that India’s startup ecosystem will be able to address these challenges in the coming years. Urban-rural gaps in terms of digital literacy has also been a pressing issue in the country. Increased digital and financial literacy, support for technological innovations, and state initiatives to bridge the rural-urban financial disparity will be crucial in leading India on the path of financial digitalization.
