In financial year 2021, over 40 billion digital transactions worth more than a quadrillion Indian rupees were recorded across the country. These numbers alone show the importance of digital payments for India’s financial services sector. Thereby, it is no surprise, that payments also mark the most important segment within the country’s vivid FinTech environment.
The National Payments Corporation of India (NPCI), founded as an initiative by the Reserve Bank of India and the Indian Banks’ Association, provides the crucial infrastructure for several payment systems. Among those services are the highly used Unified Payments Interface (UPI), which was supported by over 200 banks, as well as the card scheme RuPay 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 broad sections of society.
The ongoing trend in digital payments and the amount of available funds for FinTech innovations resulted in a highly contested market, especially in the e-wallet segment. Whereas GooglePay emerged as the most popular payment method in a survey in 2020, domestic provider paytm led in terms of revenue. Among the 32 Indian unicorns of 2021 were nine Fintech companies.
Despite these positive steps and ambitious figures, the country lacks the infrastructure to completely make the transition to a cashless society for now. Among the problems that users faced were failures on payment platforms, poor internet connections, and reimbursement issues. Despite the efforts to include more and more inhabitants in financial service schemes like the PMJDY, the numbers of inoperative accounts indicate that there is still a way to go, especially in rural areas, where many people depend on the unorganized sector.