The pandemic has undoubtedly influenced a myriad of sectors in the world, at large, and our country, in particular. Among all these areas, the digital payments ecosystem has experienced tremendous growth. Will you be shocked to know that the net worth of digital transactions in 2020, the first year of the pandemic, was $2.9 trillion? Well, that is huge! But, guess what? This is just the beginning! In 2021, the net worth of digital transactions in India reached a giant figure of Rs 63.2 lakh crore. In fact, in 2022, this amount is expected to reach $2.16 trillion.
In this period of “new normal”, businesses are relying on online payments to move ahead with their revenue generation acts. Before the pandemic had started, digital payments were not a part of the mainstream culture. Not everyone was acquainted with the intricacies of online payments. The COVID-19 pandemic triggered a spurt in the volume of UPI transactions in India.
Curious to know how this unconventional shift of India towards adopting digital payments going to affect the very concept of online payments? Wondering what future trends are going to emerge in the ecosystem of online monetary transactions? Well, keep reading to find out what holds in store for digital transactions in India!
Reasons For Embracing Digital Payments
In 2020, as many as 48 billion transactions were made. And, guess what? 2021 was no less! Let’s have a quick look at the factors that induced this swift turn to digital transactions in our country.
- The growing concern for health among the masses and deliberate attempts of insulation from public contact;
- Grand entry of tech giants and new players in the digital payments ecosystem;
- Efforts to elevate customer experience;
- Endeavour to bring technology in the fold of business and simplify monetary transactions
Trends In The Digital Transaction Ecosystem
#1: Large-Scale Adoption Of Online Payment Apps
Digital payment apps such as Google Pay, Paytm, PhonePe etc., are on the rise in the present day. Although these apps were in existence for a long period, they were not a part of mainstream business society till the pandemic crashed down upon the world. Starting from local grocery stores to brand showrooms in world-class shopping malls, the option of digital payments has become a normalised aspect. No matter where you go and what service you intend to purchase, the mode of online payments is sure to prevail. Booking tickets? Use UPI. Going to a movie? Why use online payments! Shopping in your favourite store? Well, use the online payment apps! Irrespective of the activity you are doing and the service you are going to purchase, cashless payment has become the necessity of the hour. With every passing day, more and more people are going to move around freely without having to face the hassle of making payments in cash.
Zero-touch payments have witnessed immense popularity in the age of pandemics. The growing tendency among the masses to stay safe and abstain from contacting the “surface” has made a great volume of users adopt the payment apps and prefer UPI for completing all sorts of monetary transactions. Since card payments are not contactless, large chunks of people are going in the direction of making online transactions. And thus, it is one of the reasons behind India’s complete shift towards embracing digital payments.
#2: Digitalisation Of Banking Services
Well, here too, in this specific trend, the pandemic had a great role to play. Earlier, people used to travel to the banks and enjoy services such as money deposition, account creation and much more with the help of banking professionals. However, this factor of “virus” made people wary of their health. Banks are making investments in the digitalisation venture to ensure the dissemination of services to the public, completely in the “online” mode. Although this norm has not been made a full-fledged one, it is expected that online banking facilities will become a part of the mainstream culture shortly.
#3: Emergence Of Payment Management Systems For Banks & Companies
Billions of UPI transactions are being made since 2020. While online payments were proliferating at a massive rate, these very digital payments have emerged as causes of technical outages, server downtimes and various other technical issues. Important banks of India faced massive technical problems which resulted in great failure of online monetary transactions. To address this hurdle in the way of digital payments, it has been suggested in an RBI report that special focus will be given to enhance the design of the basic technical system so that online transactions can be made smoothly. The development of a separate platform to process and verify transactions that are made quite frequently will be instrumental in lessening the burden usually exerted on the main banking infrastructure.
Once the payments hubs emerge, the digital payments ecosystem will witness a greater benefit. This is because the highly advanced system of payments hubs is going to support multichannel payments. Not only this but these hubs also contribute towards the provision of a highly unified banking platform. Do you know what the best part of this system is? Well, the efficiency of operation is enhanced and the great flexibility is introduced, while also keeping the overhead fees as low as possible.
New Innovations In Digital Payments System
- Creation of Payments Infrastructure Development Fund or PIDF to lay a solid foundation for digital payments and create a strong infrastructure to support online payments in the 3-6 tier cities and the North-Eastern States of India.
- An innovation hub is being developed by the RBI to adopt new technologies and make the space of cross-border payments an overly simple concept.
- Optimal utilisation of IndiaStack is going to be made to ensure that the Government, Indian banks and other business firms get the chance to make the most of digitalisation and go completely paperless when things come to developing interoperability and onboarding, new customers or merchants.
Starting from 2020, the sector of digital payments is witnessing a sea change in India. Its net worth is going to multiply to a great extent, in the coming years. How exciting will it be to see how events unfold in this space! The area of online payments is going to reach sky-rocketing heights. And all we can do is wait for its huge growth! Stay tuned to our blogs to keep knowing more about the online payments ecosystem.