Over the past 6-7 years, India has taken big leaps to become a cash-light economy. A nation that was previously dominated by cash transactions has evolved with the dynamic payments’ ecosystem. As consumers and merchants experienced the convenience, safety along with other benefits of digital payments
and aspirations to do more surged, the country registered over 21 billion transactions in FY20. Moreover, encouraged by the early achievements of the digital economy, the Government set an even more ambitious target of over 46 billion for the current fiscal. Let us see where do we stand in this journey and what’s in store.
With social distancing becoming the new norm, there is a behavioural shift across all consumer categories. The escalating concerns about the spread of the virus through contact have ignited an acceptance of digital payments
across the country. Post-Covid, 60 per cent of all digital transactions in the country have shifted to online platforms, which stood at 40 per cent earlier. It is evident that there has been a surge in contactless payment volumes across online grocery stores, small retail outlets, online pharmacies, vegetable and fruit vendors, recharges, bill payments and so on.
In these difficult times, the digital ecosystem has proven crucial in fulfilling business transactions, peer-to-peer transfers as well as government direct-benefit-transfers. Essential categories such as pharmaceuticals, health and wellness and groceries, fuel, home automation etc. have powered the growth of contactless payments and has made it second nature over time, taking over various form factors such as wearables, ‘tap-on-phone’ etc. Digital payment volumes are also receiving a boost through the Government’s initiatives such as ‘Cashless India’ and allowing contactless transactions above Rs 2,000 with ‘tap-and-PIN’.
Nearly 25% of the cards are ‘contactless’ and about 15% of the transaction volume is through them — up from the single digits a few years back
India is now among the exciting payments hotspots in the world. Nearly 25 per cent of the cards are ‘contactless’ and about 15 per cent of the transaction volume is through them — up from the single digits a few years back. Giant payment companies are collaborating with fintechs to create and deploy several low-cost, easy to use, multi-purpose payments acceptance solutions for micro, small and medium enterprises (MSMEs). Digital multiform factor point-of-sale solution allows merchants to accept payments through various digital form factors including Bharat QR, near-field communication; and link-based payments, simply using their smartphones. It does not need any new hardware infrastructure and merchants can use this solution to create a catalogue of items available and offer convenience in ordering online. Interestingly, a recent study says, the growth of digital payments
specifically will come out by increasing penetration with offline merchants and the penetration with the unorganised retail sector will grow on the back of increased merchant digitisation in cities beyond tier-II. So, from hawkers to MSMEs, everyone is gradually going digital.
The future takes a leaf from the present. In the coming days, forward looking merchants, banks, and financial institutions will leverage new technologies and data analytics to create a personalised way for consumers to consider, consume and purchase goods and services. For instance, audio-visual sensory engagement provides simple, seamless familiarity and an additional assurance to the consumer and merchant that the transaction has been completed safely and securely. At the same time, the digital payments ecosystem is getting safer and secure with every progressing day, thanks to technologies such as tokenisation, predictive fraud management, and new security standards. Furthermore, augmented reality, virtual reality, wearable technology are also becoming mainstream, taking the consumer experience to completely different levels. As it is said, the whole is the sum of parts, India is all set to emerge as a digitally empowered, less cash, atmanirbhar economy.