India is in an exciting period, with digitalization driving the fundamentals. With the emergence of the digital payment system: UPI and Net-banking and the e-commerce business as a significant offshoot in the previous decade, the digitalization process has gained steam.
However, India’s digital landscape is still in its infancy, with policy framework and technological adoption driving much of the transition. The digital payment system is the poster child for a transforming financial industry.
To entice users to utilize their platforms, huge companies are entering the fray and offering cash backs, awards, and discounts. Digital wallet firms have benefited greatly from increased smartphone adoption and lower internet costs, and they have begun to establish a foothold in customers’ lives.
When Mahendra Nerurkar, the CEO of Amazon Pay, addressed to the media in one of his interviews, he mentioned that the Amazon Pay feature would be available in 2020. “Since then, we’ve seen two million consumers use the service on the platform, with about 10 million transactions tallied up to June 2021,” he added.
That explains why the country’s desire for digital payments is fast expanding in the middle of the epidemic.
What was once referred to as a cash economy has been transformed into one of the world’s fastest-growing financial economies thanks to the use of digital payment methods. However, because the new economy necessitates a regulatory framework and an authoritative system, the transformation is still ongoing.
India is one of the top countries with the world’s fifth-largest online customer base, and the majority of them only use mobile internet, which is a crucial factor in the digital payment success story. People can now go beyond traditional payment methods thanks to the rise of new-age technologies like e-wallets, UPI, tap, and pay.
Factors that made UPI a convenient method of digital payments:
Corporate opportunities:
The growth of the digital payments sector has offered a massive potential for businesses to expand and lead. A number of major players have already joined the market and plan to expand rapidly. It is becoming increasingly important to have seamless technology, and IT organizations are working hard to improve the user experience.
Growth of E-Commerce:
Digital payments and UPI have played a key role in the growth of E-commerce in India, and they will continue to do so in the future. As the use of smartphones and digital payments continues to rise, the rising trend of online shopping will become much stronger.
Transparency is brought about by technology:
As cash transactions become less common, the system becomes more transparent. With every transaction documented and tracked, the risk of losing money or engaging in other illegal acts is reduced.
UPI is better for the entire industry:
The digital form of payment has a lower operational cost, which is a good sign for overall industry growth. By using digital payments, you may eliminate the delays caused by cheque clearance and money transfer. As a result, both time and other resources are saved. As time restrictions are removed by fast payment choices, the turnaround time of every task is lowered.
Simpler method of payment:
Payments done using digital technologies are usually simple and time-saving. Without the need for hard currency, anyone with a smartphone and a bank account can make a direct payment to the business.
Geographic independence: A decade back was the time when sending money or payments to vendors or loved ones was impossible. The traditional methods were not only time-consuming but also limited in their reach.
Money can now be delivered in seconds, even in the most remote regions, thanks to the advent of digital payment methods.
Geographic independence:
A decade back was the time when sending money or payments to vendors or loved ones was impossible. The traditional methods were not only time-consuming but also limited in their reach. Money can now be delivered in seconds, even in the most remote regions, thanks to the advent of digital payment methods.
What is assisting UPI in gaining consumer acceptance?
The UPI platform stands out in the real-time payments sector because to its interoperability and simplicity of design. Users can be customers of Bank A, but they can link their Bank A account to the UPI app of Bank B, or to fintech apps like Google Pay or Amazon Pay, making their bank account portable.
Users with several bank accounts can link all of their accounts to a single app. This capacity makes the platform incredibly user-friendly for end users – similar to a “super wallet,” but using bank accounts directly rather than requiring a consumer to have a debit or credit card.
Using unique identifiers known as Virtual Payment Addresses, UPI makes payment exceedingly simple and secure (VPA). A VPA allows customers to identify themselves with the person they wish to pay without having to give out their credit card or bank account information, reducing the risk of fraud.
Concluding words:
While merchant transactions have increased in recent years, the offline merchant market still has a long way to go. Banks are optimistic about this possibility and expect to succeed quickly.
UPI is projected to provide new opportunities in credit, insurance, wealth management, and loyalty, among other areas, in addition to physical and eCommerce shops.
UPI was created with the goal of making digital payments simple and available to everyone, and it has been successful in propelling India toward a “less-cash” economy to a large extent.
What will be fascinating to witness is how the ecosystem’s many players contribute and collaborate to make this a payment product that the rest of the world aspires to. One thing is certain: real-time and digital payment capabilities such as UPI are not going away anytime soon.
The world of payments is changing; real-time systems are being implemented all over the world, and digital transformation is becoming the standard. And the intersection of these two global trends – in India – makes the payments industry a very fascinating place to be – let’s see what the next few years bring in India and beyond.
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