Democratizing Digital Payments: Indian and Beyond
[Blog by: Mr. Ritesh Shukla, CEO – NPCI International Payments Limited (NIPL) ; https://www.npci.org.in/who-we-are/management-team/mr-ritesh-shukla]
India’s digital payments system is evolving rapidly encouraged by the concept of “digital public good”, truly democratizing payments, with access to anyone who wants to build on it. India’s unique approach to democratizing technology and developing Digital Public Goods has led to large-scale financial inclusion for its billion-plus population. The success of India’s thriving digital payments landscape is encouraged by various developments in technology and by progressive Regulatory and Government policies.
India’s digital Revolution started with the Government of India launching the Digital India program in 2015 aided by India’s biometric digital ID system dubbed “Aadhaar”. The financial inclusion journey was further taken ahead by initiatives like Pradhan Mantri Jan Dhan Yojana (PMJDY), JAM trinity (Jan Dhan, Aadhaar, and Mobile), Direct benefit transfer(DBT) Aadhaar enabled payments system(AePS), and breakthrough Unified Payments Interface(UPI), and RuPay, etc fuelled by the proliferation of high-speed internet and increased smartphone penetration.
India at the forefront of a digital payment revolution
Today, India has over 825.30 million Internet users and around 1.2 billion mobile users. 1.3 billion people—almost 90 percent of India’s population have Aadhaar ID and over 80% of Indian adults (age 15+) have a bank account. Over 340 Million Indians enjoyed doorstep banking through AePS in FY 21. So far, 714 million RuPay cards have been issued that have clocked over 1.3 billion transactions. In 2021, India accounted for the largest number of real-time transactions- 48.6 billion which is almost threefold that of the closest challenger China with 18 billion transactions and almost seven times greater than the combined real-time payments volume of the world’s leading economies – U.S., Canada, U.K., France, and Germany with 7.5 billion transactions.
India’s UPI has perhaps grown at the fastest pace than any real-time payments (RTP) system globally.
In the Financial year 2022 (FY22), UPI enabled 45.6 Billion transactions, worth USD 1 Trillion, making it the best performing real-time payment eco-system in the world. UPI has witnessed spectacular growth since it was launched, in sync with the economic growth and increased adoption of digital payments in the country. The widespread adoption of real-time payments in India resulted in estimated cost savings of USD 12.6 billion for Indian businesses and consumers in 2021, which helped to unlock USD 16.4 billion of economic output which represents 0.56% of the country’s GDP. The growth and innovations in India’s fintechs space has propelled financial inclusion for a large chunk of India’s rural population and helped with cash displacement thereby advancing India towards achieving the aim of a “less-cash” society.
Scope for Global-scale
India’s digital payments ecosystem is unique with the successful working partnerships between society, government, regulators, payment companies, banks, non-banking financial services companies, and fintech organizations. The ripples of India’s digital payments success are already spreading across the globe. Akin to NPCI’s model of eco-system level collaboration in India, NPCI International (NIPL) is looking to build strategic partnerships for facilitating the internationalization of India’s self-reliant payment systems, especially UPI and RuPay, to newer markets, globally. The objective is to take the “public good of India” to the “public good for the world”. The opportunity is to enable creation of soverign UPI-like payment system for other countries to deliver the value that UPI has delivered in India i.e. in the area of financial inclusion, citizen welfare, cash displacement, and supporting business. The government and RBI are actively supporting this initiative to make our local platforms go global. Many successful partnerships are already in play with institutions like Mashreq Bank for driving digital transactions through their NeoPay terminals in the UAE, Discover Financial Services (DFS) in USA, Lulu Financial Holdings, Al Ansari Exchange, Arab Monetary Fund, Japan Credit Bureau (JCB) Japan, Union Pay International (UPI) China, Royal Monetary Authority (RMA) of Bhutan, Manam Infotech of Nepal, Network for Electronic Transfers (NETS) of Singapore and Terra Pay of Netherlands among more.
India’s UPI is purpose-designed to deliver value in areas of inclusion and standardization. The pillars of UPI are based on Interoperability, real-time payments, API-driven and Open banking model, running on aliases, a collaborative engagement model, and integration with multiple servicing channels. The interconnected suite of India’s digital payments systems as a whole allows for the easy identification of account owners, routing of payments, and handling of digital information which will make it easier for other countries to replicate the model. With our digital payments ecosystem, there is an opportunity for India to build partnerships globally, to drive digital public good of the world and demonstrate the ethos of “Vasudhaiva Kutumbakam”.
