In the first eight months of this year (January to August), India recorded significant growth in digital payments, clocking 3.5 billion digital transactions worth IN₹6 trillion (US$80.9 billion). The Finance Minister, Nirmala Sitharaman, announced these findings at the Global Fintech Festival. The event was organised by the Fintech Convergence Council (FCC), the Payments Council of India (PCI), the two Councils of Internet and Mobile Association of India (IAMAI), and the National Payments Corporation of India (NPCI).
In 2019, the country had about IN₹2 trillion (US$26.9 billion) worth of digital payments. The figure grew to IN₹4 trillion (US$53.9 billion) in 2020. The Minister stated that India has the highest fintech adoption rate of 87% as opposed to the global average rate of 64%, which establishes the country as a prime destination for digital payments and activities. The figures show the energetic participation from users, the industry, and the government in the digital ecosystem.
The Minister further noted that fintech start-ups today are upgrading and updating business operations with emerging technologies and therefore propelling India’s transformation into a fintech hub. The country has witnessed a collaboration between user demand, technology innovation, and government support for digital payments.
At the event, the Minister unveiled the United Nations (UN) Principles for Responsible Digital Payments. Sitharaman claimed that India has democratised financial services and accelerated the deployment of digital public good infrastructure that promotes financial inclusion and progress towards achieving its sustainable development goals. She said that the principles come at the right time and will serve as an important resource to all stakeholders in delivering digital payments with consent, privacy, transparency, and options for the end-users. The Minister also emphasised the need for women to participate in technology as the economy depends on the active participation of this demographic.
The Unified Payments Interface (UPI), which is the government’s instant real-time payment system that facilitates inter-bank transactions, is covered in the UN Principles as an example of how an open, inclusive, and interoperable digital public good infrastructure can lead to greater economic participation by the society. The report revolves around consumer protection good practices that put users at the centre of payment digitisation, especially women and people living in rural areas who are frequently left out of the formal financial sector. The principles mentioned in the report include safeguarding of data; recourse; transparency on pricing, interoperability within a digital payments ecosystem that treats everyone fairly; prioritizing women; ensuring products are designed for user needs; providing choice; and ensuring accountability to deliver on these vital tenets of responsibility. UPI transactions are expected to grow at a 22% cumulative growth rate to hit a total transaction volume of IN₹6.2 trillion (US$84 billion) by 2025.
Last year, the country processed 25.5 billion real-time payments transactions, followed by 15.7 billion in China, 6 billion in South Korea, 5.2 billion in Thailand, and 2.8 billion in the UK. By 2025, digital payments in India could account for 71.7% of the total payments volume, leaving cash and cheques at 28.3%. Further, in 2020, the transaction volume share in the country stood at 15.6% and 22.9% for instant payments and other electronic payments, respectively. Paper-based payments had a considerable share of 61.4%. More than 70.3 billion real-time payment transactions were processed globally last year, a surge of 41% compared to the previous year, as the COVID-19 pandemic dramatically accelerated trends away from cash and cheques towards greater reliance on real-time and digital payments.
