From being a cash-oriented economy, India has transformed its payment sector to a large extent. The boom in digital payments is attributed to various factors like smartphone penetration and progressive regulatory policies. Especially after the Government of India passed the Demonetization Act in 2016, both the urban and rural populations have adopted digital payments in large numbers.
The Unified Payment Interface (UPI), an instant payment mode between bank accounts, has enabled the success of India’s digital payment system. In fact, Google has detailed the successful example of a UPI solutions-based digital system to the US Federal Reserve Board to build a new inter-bank Real Time Gross Settlement ( RTGS) service for faster digital payments in the US. “We've had a lot of traction with our payments product over the past 18 months. We had a tremendously successful launch in India from which we learned a lot of features, and we are bringing that and we are revamping our payments products globally,” said Sundar Pichai the CEO of Alphabet speaking to analysts after the company’s fourth-quarter earnings. Alphabet is the parent company of Google.
The growth of e-commerce followed by the emergence of digital payment wallets like Google Pay has lured customers to opt for digital payment solutions. Apart from this, the convenience of going digital has attracted the youth to opt for such payment systems. According to a committee formed by the Reserve Bank of India, digital payment users in India are expected to grow from 100 million to 300 million and the per capita income is expected to reach 220 by 2022.
The figures, thus, prove that digital payments have been widely accepted by customers. On the other hand, the change has tasked businessmen and retailers to accept the latest payment processes and accordingly revamp their systems. For retailers, upgrading to a system accepting digital payments could be difficult due to a lack of industry standardization and the cost of implementation. However, to keep up with the latest technology and survive the competition, businesses need to alter their systems. India has seen the emergence of few cutting-edge PayTech firms that have built innovative use cases around UPI and Real Time Payments and also help business adapt their legacy systems to cater to the new world of Digital Payments.