Digital Payments help unlock economic and social value

In recent years, India’s Digital Payment ecosystem has grown by leaps and bounds. In 2022, Unified Payments Interface (UPI) breached the $1 trillion mark in value processed and closed the year with 74 billion transactions.^[1] On the face of it, this digital payment revolution has been powered by smartphones and internet connectivity. However, the Government of India has also played a key role by focusing on digital services and offering the stack infrastructure to all players within the ecosystem.

Digital payments compete with cash

Traditionally, India has been a cash-first economy and society, and while credit and debit cards have been around for a couple of decades, they remained a predominantly urban phenomenon prevalent among the upwardly mobile. But digital payments, particularly UPI, allow users to send money from or receive money to their bank accounts without any charges, all they need is a bank account and a mobile phone. With changing dynamics today, UPI or digital wallets no longer compete with debit or credit cards but with cash itself.

This reflects in our survey findings, with 63% of debit card users preferring UPI or mobile wallets over cards or cash.

Rise in the adoption of UPI and Wallet

The success or failure of an innovative financial product depends on how consumers perceive the benefits on offer. Volume and value of transactions conducted through UPI and mobile wallets would suggest a high rate of adoption of digital payments in India. This shift has occurred due to a few reasons, which according to our survey includes, ease of use (63%), safety (57%), and speed of transaction (51%).

With peer-to-peer and peer-to-merchant payments, individuals and businesses can make instant payments of almost any ticket size to anyone or anywhere in India. As a result, the now the QR code can be found everywhere, from the humble kirana shop in a small village to the fancy high street malls in metros.

Rise and adoption of UPI and mobile wallets can be attributed to the ease & convenience, combined with growing number of merchants in neighbourhood accepting UPI/Wallet payments.

Women feel empowered with digital payments

Across vast parts of India, all monetary matters in a household are typically managed by men, with the role of women largely restricted to performing domestic chores. As a result, women lag behind men when it comes to being independent or using technology or gadgets. The advent of social media addressed this to some degree by enabling women to connect with the rest of the world, sharing their views using technology.

However, UPI and wallet payments enable women to deal with real money to conduct financial transactions. Besides helping manage household expenses and personal finances, they send and receive money through digital payments helps them go beyond social media conversations to something more tangible and real. Our survey revealed that using mobile wallets makes women feel independent (38%) and tech-savvy (40%). Besides the sociocultural impact, digital payments also have the potential to boost entrepreneurial activity, which could further strengthen the stature of women in the years to come.

India’s journey from credit and debit cards to online banking to digital payments has been relatively short, and yet, we have emerged as a global leader in digital payments. Its success is a function of an entire ecosystem coming together like an orchestra with various participants, including the government and private companies playing different parts but the same tune. And in addition to the tangible benefits like not having to carry cash and the convenience of conducting online transactions, digital payment solutions like UPI and mobile wallets go a long way in helping unlock economic and social value at a scale.