India’s digital payment landscape inspires the world!

Northlines Correspondent


According to reports, during the second quarter of the financial year (July –September) 2022, a total of 20.57 billion transactions totalling Rs 36.08 trillion were processed via payment options such as debit and credit cards, mobile wallets and prepaid cards, and UPI. Furthermore, for PayTM transactions, UPI has become the preferred mode of transaction, accounting for 34% of total transaction volume. In addition to UPI, credit card payments have seen steady growth as the preferred method for large-ticket purchases.

The government laid the groundwork for “digital public infrastructure,” which was then built upon by a strong Public Private Partnership. It has made daily life more convenient for millions of Indians, expanded banking services such as credit and savings, and expanded the reach of government programmes and tax collection.

The number of partner banks available for UPI transactions has steadily increased, and the payment method is now accepted in countries such as the UAE, Singapore, France, and Bhutan. The global acceptance of 's ubiquitous payment interface vouches strength and appeal of India's new digital platform. Another area that saw a significant increase was POS terminals, with the total number of terminals deployed by banks standing at 6.59 million in September this year, a 43% increase from the previous year. Furthermore, the year saw initiatives to strengthen the transaction/payment ecosystem through the implementation of two factor authentication and tokenization, providing additional impetus to the growth of digital payments.

According to Dilip Asbe, managing director of the Payments Corporation of India, which oversees the platform, approximately eight billion transactions worth nearly $200 billion were carried out on the U.P.I. in January.

Currently, 40% of all payments are made digitally.

Last year, the value of instant digital transactions in India was far greater than in the United States, the United Kingdom, Germany, and France.

The ATM sector maintained its revival spirit with increased deployment of Cash Recycler Machines or CRM, new RFP (request for proposal) pipelines by public and private sector banks, and the introduction of an e-lobby or digital banking unit (DBU). These developments are likely to transform the entire banking experience for the average Indian in the near future.

And, while cash and digital payments will coexist in our country for more time, driving the overall payment pie's growth, there are some key payment trends to keep an eye on.


Prepaid Cards from the Open Loop

As we look forward to 2023, one of the major trends expected in the new year is the emergence and growth of open loop prepaid cards, which provide consumers with overall convenience. According to an industry study, the Indian prepaid card market is expected to grow at a compounded annual rate of 40.5% between 2021 and 2026, and the trend is already visible in the country, owing to increased internet and smartphone usage, as well as robust growth in the E-commerce sector. While most prepaid cards were closed or semi-closed loop, meaning that users could only access a limited number of services with their prepaid balance, 2023 is expected to see an increase in open loop cards that can be used across touch-points that accept RuPay, Visa, Mastercard, and other networks.

The RuPay platform currently supports offline payments for multi-modal transit via the National Common Mobility Card. Customers can use their existing cards to make payments across underlying sectors such as metro, bus, suburban railways, smart city, retail, toll, and parking with this service. Such services are expected to increase cross-platform payments while remaining safe and secure. As travel becomes more normal, the mobility sector, particularly fuel refilling, is likely to see the next big impact.


ATM Expansion Continues

The next payment landscape trend that will dominate in 2023 is the continued growth and expansion of ATMs. There is a growing trend of Cash Recycler Machines or CRMs, a new pipeline of request for proposals, and approximately 32.4 lakh crores of currency in circulation (as on December 16, 2022). There will be an influx of innovative technologies on traditional cash dispensing machines, such as OTP and UPI QR Code access, making not only cash withdrawals but also cash deposits more streamlined and seamless. These features will also improve ATM/CRM security because the card will no longer be the sole touch-point for validating transactions.

Furthermore, the year 2023 will see more organised cash management services at ATMs as a result of the implementation of various RBI and Ministry of Home Affairs (MHA) guidelines such as cassette swapping, which will bring India's ATM ecosystem up to global standards.


Digital Banking Units Emerge

Moving into 2023, there is considerable optimism surrounding the Reserve Bank of India's (RBI) recent initiative to establish 75 digital banking units in 75 Indian districts. These Digital Banking Units (DBUs), which were established by scheduled commercial banks, are expected to significantly increase last-point accessibility for financial services, thereby helping to formalise the landscape in a sustainable and seamless manner. These DBUs will enable cash withdrawal and deposit via ATMs and CRMs. They will be completely paperless models that offer specialised business services via digital infrastructure. They will also make it easier to open bank accounts, Fixed Deposits and Recurring Deposits, Print passbooks, use mobile and internet banking, and issue debit, credit, and mass transit system cards. DBUs will also enable paperless loan processing for both MSMEs and merchants, ensuring nationwide financial access.


Switching to Tokenized



As India continues on its digitisation journey, the country's financial landscape will implement stricter controls for a safer payment platform through initiatives such as tokenisation by 2023. Tokenization, a process that replaces the 16-digit card number with a random and unique token during digital transactions, will greatly reduce the possibility of online card fraud, ensuring safer transactions and reducing cybercrime.


The Emergence of Digital


The newly launched Central Bank Digital Currency (CBDC) is expected to supplement cash while also lowering the cost of printing cash and, in the long run, standardising digital transactions. As we approach 2023, CBDC is also likely to improve systemic operational efficiency and promote financial inclusion.

The New Year is expected to be another significant milestone in India's financial and payments journey, with these trends acting as drivers of long-term progress.