pandemic is expected to further amplify the reach of digital payments
with people terrified of using cash. “The consumers’ shift to digital channels would enable every business, small or large scale, to embrace digital payments and facilitate financial inclusion at a macro level. The pandemic is also accelerating the transition to online as physical retail stores and businesses have taken a massive hit”, the report added.
While digital payment transactions saw a drop in the month of April due to the strict lockdown, since then they have shown a gradual recovery to pre-Covid levels. UPI
even clocked the highest transactions in value and volume terms in June since its inception, indicating people’s preference for digital payment methods. The report estimates that UPI
truncation in volume terms will reach 59 billion by 2023, BBPS transactions in volume terms are expected to reach 570 million, and AePS may clock 2,467 million transactions.
While the government and the regulator – Reserve Bank of India – have been proactive in their policies to deepen the acceptance of digital payments, a few initiatives such as launching a Covid-19
focused sandbox for payment and fintech players to innovate, allowing non-bank entities to use Aadhaar based e-KYC, faster on-boarding of merchants, a lower controlled interchange on QR code/UPI/RuPay instead of a zero merchant discount rate will certainly help the ecosystem.
“Going forward, the digital payments industry is set to undergo a transformation in order to improve customer experience, cost efficiency, security. The uptake of digital payment methods is set to further increase and gain more acceptance in the market," the report said.
It further added that, as the Covid-19
crisis had significantly improved the uptake of digital payments, the prospects of the digital payments industry looked encouraging and would attract significant investments in the future. Mergers and acquisitions would be a path followed by companies to grow inorganically and establish themselves as leading players in the market.