By Kunal Jhunjhunwala
Fintech is evolving at an unthinkable pace and transforming the entire landscape. The way India is making payments is a testimony to this fact. As per government data, the Unified Payments Interface (UPI) payments hit a record high of Rs 12.82 lakh crore in December 2022. A total of 782 crore transactions were carried out in the same month. At the recently concluded World Economic Forum summit in Davos, Union minister Ashwini Vaishnaw stated that India’s digital payments transactions last year exceeded those of the combined digital payments of the United States, United Kingdom, Germany and France. “In December 2022, the digital payments transactions amounted to $1.5 trillion annualised basis. If you compare total digital transactions in the US, UK, Germany and France and combine them, India’s figures are more than that,” he had said.
What are the factors propelling this growth? Let’s deep dive.
Affordable Phones and Data
According to the Ministry of Information and Broadcasting, India has over 1.2 billion mobile phone users, of which 600 million have a smartphone. This number is expected to touch 1 billion by 2026 and the rural areas are going to be at the forefront of the sales, as per a Deloitte study. Propelling this growth is the availability of affordable data with faster connectivity, which is enabling the ‘less privileged’ Bharat access a whole new world of digital services. Even the less expensive smartphones have the competitive processing power, resulting in safe and fraud-free digital transactions with the use of features such as facial recognition, biometrics and several multi-factor authentications. Besides, internet-enabled devices are set to get a fillip in the rural market with the government’s plan to fiberise all the villages under the BharatNet programme by 2025. Needless to say, this is a flourishing ground for seamless digital initiatives.
The Much-Needed Regulatory Push
The Government’s strategy to digitise the financial sector and thus the economy has brought about a change in the growth trajectory of digital payments in the country. Intensive efforts have been put into promoting financial inclusion in the real Bharat, paving way for a technological revolution. One of the major enablers of this growth story is the JAM Trinity—Jan Dhan, Aadhaar and Mobile. Assisting this evolution is the Aadhar-based welfare delivery and a persistent drive towards the formalisation of transactions. On January 11, 2023, the Union Cabinet approved the incentive scheme with a financial outlay of Rs 26 billion for the promotion of RuPay Debit Cards and low-value BHIM-UPI transactions, thus giving an impetus to the emerging digital payments sector in India.
Demand for a Seamless Experience
With accessibility to mobile phones and cheap data, there has been an inevitable increase in demand by consumers for a frictionless payment environment. As per several studies on the digital payments sector, the masses are rejecting services or platforms which are not intuitively designed and are difficult to use. Convenience is taking centre stage even if it just about a ‘click of a button’.
(Kunal Jhunjhunwala is the Founder and the Managing Director of airpay. Views expressed are author’s own.)