Digital Payments and Their Impact On The Indian
Digital Payments and Their Impact On The Indian
Digital Payments and Their Impact On The Indian
• India had 1.18 billion mobile connections , 700 million Internet users, and about 600 million
smartphones
• 25.5 billion real- time payment transactions
• Ranked 1 st in the world (number of transactions in 2020)
• In 1996 - ICICI introduced online banking services by using electronic banking
• In 1999 – HDFC, IndusInd, Citi launched online banking facilities.
• In 2008 – National Payments Corporation of India started its journey (formed by RBI and IBA).
TYPES OF DIGITAL PAYMENTS IN INDIA
• BANKING CARD
• AEPS
• UPI
• MOBILE WALLET
• BANK PRE-PAID CARD
• INTERNET BANKING
• MOBILE BANKING
• MICRO ATM
BANKING CARD
• Plastic card issued by a bank to its clients that performs one or more of a number of services that
relate to giving the client access to bank account.
• Linked to a depository account, including ATM cards and debit cards.
• Used for e-commerce purchases and other kinds of spending, with the amount deducted directly
from the account at the time of transaction.
AADHAAR ENABLED PAYMENT SYSTEMS (AEPS)
• Aadhaar Enabled Payment System (AEPS) is a payment service that allows a bank customer to
use Aadhaar as his/her identity to access his/her Aadhaar enabled bank account.
• The services available under Aeps:
i. Cash Withdrawal
ii. Balance Enquiry
iii. Mini Statement
iv. Aadhaar to Aadhaar Fund Transfer
UNIFIED PAYMENT INTERFACE (UPI)
• Smartphone application that allows users to transfer money between bank accounts.
• Single-window mobile payment system developed by the National Payments Corporation of
India (NPCI).
• Eliminates the need to enter bank details or other sensitive information each time a customer
initiates a transaction making it a safe way to bank.
MOBILE WALLET
• Many offers, coupons, discounts and rewards can be offered to the users.
• Makes marketing of companies and services easy and fruitful
• Boosts consumer spending ; increase in buy and sell activities would drive growth in the
economy
• Monitor illicit activities
• Helps in tracking the economic activities in the country
• Mobile banking and Payment apps helps consumer to pay electricity bill, tv, mobile and any
other bills
BROADER IMPACT
• The digital payment space has seen some of the prominent tech giants investing in an
opportunity worth US$ 3.6 trillion.
• Factors that facilitate the entry of tech giants include:
Various platforms to influence offering
Greater access to the consumer data pool
New and existing consumer base
Relatively fewer regulations as compared to banks
A large existing revenue pool
Digital payments not only address the existing business needs of big tech firms but also
guarantee greater consumer adhesiveness.
IMPACT ON OFFLINE PAYMENTS
• Cell phones are increasingly being used for making digital payments, compared to plastic
cards.
• The RBI’s move to allow offline digital payments of an amount not exceeding US$ 2.6 (Rs 200)
without an active Internet connection will be a game-changer for this industry.
• The RBI is now allowing solution providers to ignore the two-factor authentication, like the
Unified Payments Interface (UPI), which could result in more merchants adopting payments
solutions such as the Unstructured Supplementary Service Data (USSD), SIM overlay and near-
field communication (NFC).
FUTURE OF DIGITAL PAYMENTS IN INDIA