The digital payment landscape in India is undergoing a massive transformation. The past few years have seen a significant exodus to digital payments especially after the strong steps implemented by the government (read: demonetization) in favor of cashless economy. Add to this the ever increasing growth of smartphone users and the sprouting UPI and wallet mobile apps. To quote an instance, the UPI based digital payment app by the govt. of India called BHIM created a world record of sorts when it was downloaded 17 million times within two months of demonetization. Other channels such as IMPS witnessed a steep growth of 97%.
India witnessed an overall digital monetary turnover of around Rs. 3,37,200 Crore in 2018 and is estimated to grow at a CAGR of 17.5%. This is in spite of the fact that a huge chunk of smartphone users is not yet comfortable using digital modes of transactions such as a digital wallet or a UPI (Unified payment interface) app. Recently, a hugely popular communication app, Whatsapp, entered the digital payment space with elan. With a loyal customer base of more than 230 Million users in India alone, Whatsapp can surely change the UPI dynamics. The availability of cheaper smartphones and easy affordability of the internet in India has led to a further rise in the number of people adopting digital payments, contributing to the growth of UPI. Interoperability, which was deemed as a challenge some time back, is now possible with UPI apps supporting direct bank account transfers without the need of having a UPI app at the recipient’s end.
The digital payment scene in India is experiencing sharp disruption with the possibility of integrating utility payments into their ecosystems to further drive user engagement. UPI payment has thus become the blue-eyed child of digital payments attracting attention from e-commerce and FinTech players due to its ever-expanding customer base. UPI has tremendously reduced the reliance on hard cash and has also improved the liquidity, thereby boosting financial inclusion.
UPI solution is relevant to all parties. The biggest plus point of the UPI is that the money is directly transferred from bank to bank, unlike the wallets which require a third party app to hold your money. With 70+ banks already operating on UPI platforms such as BHIM and Google Pay, having a transaction volume of nearly 1,67,000 crores, UPI stands a strong contender in transforming the digital payments landscape in India.
On the banking front, with the upgraded version of Unified Payments Interface i.e. UPI 2.0, financial institutions such as banks and lenders are set to get access to a lot more consumer data, which is likely to boost consumer profiling and credit scoring in the future. Experts have commented that the new upgrade which comes with features such as an overdraft credit line through the app, will be useful in flow-based lending.
UPI is a utility that is affordable and relevant so long as user privacy is not compromised. By incorporating UPI payments into the mix, Fintech organizations can open new avenues to support India’s digital ecosphere and boost financial inclusion, transforming India into a truly digital economy. Mindgate is a leading UPI solution provider building new generation payment gateways and mobile-based collections and payments platforms like RTP & UPI.