Just like the rest of the world, the Indian market was witnessing a dramatic growth in digital markets, specifically in payments. The value of digital payments in the south Asian country recorded a whopping 769 percent share of the GDP in fiscal year 2019. A collective leap in the direction towards cashless payments has got all stakeholders on board. From only 1.5 million locations where these were processed in fiscal year 2017, the modes of online payment had reached over ten million by 2019.
India was estimated to see the fastest growth in the transactions of mobile payments in terms of value, with a CAGR of over 20 percent between 2019 and 2023. This figure includes reaching nearly 660 million Indians. Incidentally, the country will contribute about 2.2 percent to the world’s digital payment market.
The government’s efforts to support digitization led to discounts in the use of mobile wallets and UPI transactions. Non-banking players like Google Pay, Paytm and PhonePe benefitted from regulatory measures that helped in their successful foothold in the market. In addition to new players, existing ones diversified digitally to appeal to customers who saw the value in cashless, time-saving transactions. To expand these facilities to all Indians, Jan Dhan (directly translating to “people’s wealth” in Hindi) accounts were created as part of the Pradhan Mantri’s Jan Dhan Yojana . In cooperation with the NPCI and its many initiatives including BHIM and RuPay, mobile payments for Indians, specifically in rural areas, were made accessible. Aadhar-linked accounts were an essential change in the policy framework of digitizing India.
Despite these positive steps and ambitious figures, the country lacks the infrastructure to completely make the transition to a cashless society. Embedded in these positive stories lay details of poverty, ignorance, inaccessibility and many zero-balance bank accounts. India’s reliance on cash in the unorganized sectors of various industries, along with daily wageworkers left stranded by the demonetization, creates complex challenges for this on-going digital revolution.