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Indian Institute to Help Boost Digital Payments Adoption

Researchers at the Indian Institute of Technology in Madras (IIT-Madras) have recently announced that they will collaborate with members of the Mobile Payment Forum of India (MPFI) to develop voice-based solutions in multiple vernacular languages. Among the key technical areas in which IIT-Madras researchers will be working are machine learning and artificial intelligence, as applied to the digital payments space.

The aim is to boost the rate of digital money transactions in the country. At present, there are more than 100 million active Unified Payments Interface (UPI) users every month in India, as per the Indian government’s statistics. These initiatives are being taken up by MPFI in an attempt to have 500 million active users by 2025, an official statement noted. The collaboration between IIT-Madras researchers and MPFI will “provide a phenomenal platform not only for the increased adoption of digital payments in India but for research opportunities as well,” it added.

Explaining the importance of digital transactions during the pandemic, Dr Gaurav Raina, Faculty, Department of Electrical Engineering, IIT-Madras, and MPFI Chairman, said that digital, contactless payments are important not just from an efficiency point of view, but also to mitigate the risks against COVID-19. “It provides a great opportunity to help yourself and also the ecosystem.”

The Indian government, in the last Budget, allocated IN₹1,500 crores (US$205 million) to help drive the adoption of digital payments in the country. The MPFI is working to identify innovation across three levels: human behaviour and adoption, technology (design and safeguards), and policy (a data-centric view) to propel India over the next decade, the statement further noted.

Meanwhile, the digital transactions through BHIM UPI in April this year fell by 2.2% from a month ago, according to data from the National Payments Corporation of India (NPCI). The total number of transactions stood at 2.64 billion during the month, down by 3.3% from 2.73 billion in March.

Earlier this month, OpenGov Asia reported that digital payments in India could account for 71.7% of the total payments volume by 2025, leaving cash and cheques at 28.3%. Last year, 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 payments 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. During 2020, India was ahead of countries such as China and the US. 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. Among the top ten countries, the US was ranked ninth with 1.2 billion transactions.

By 2025, the share of volume by instant payments and other electronic payments is expected to rise to 37.1% and 34.6% respectively. Furthermore, by 2024 the share of real-time payments volume in overall electronic transactions will exceed 50%.

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