It is a given that digital payments will continue to reach new heights under the new government, irrespective of the politics concerned, considering the payment system's astounding popularity.
The previous two regimes led by Narendra Modi actively backed the locally developed Unified Payments Interface (UPI) as the preferred method for all payments in the country.
The possible return to power of the National Democratic Alliance (NDA) anchored by the Bharatiya Janata Party will only give continuity to existing policies, actively promoting UPI and digital payments and even possibly extending the subsidies for participating banks and payment firms that has been in place for the last four years.
In May, UPI transactions stood at more than 14 billion, worth around Rs 20.45 lakh crore. The real-time mobile payments platform today constitutes around 80 percent of all digital transactions in the country.
At the current run rate, UPI will see around 150 billion transactions this fiscal worth around Rs 240 lakh crore worth of transactions.
Relentless growth
Launched in early 2016, UPI saw its first spike in late 2016 after the government overnight withdrew large-denomination currency notes from circulation. The second spike came during the COVID pandemic when the public stayed away from cash transactions to minimise physical contact.
This move was also accelerated by the government’s announcement in 2020 that there would not be any merchant discount rate or the commission merchants pay to payments firms facilitating the transactions. This increased the acceptance of UPI or digital payments among merchants, who had been reluctant to accept card payments because of MDR.
According to the Reserve Bank of India's annual report, efforts are being made to expand the global presence of UPI and RuPay,the domestic card network payment technology developed by National Payments Corporation of India (NPCI).
Under the NDA, the NPCI, which runs UPI, had already been actively working with multiple countries to develop similar real-time domestic payment systems as a goodwill gesture.
“In light of goals for Viksit Bharat 2047, the Reserve Bank, along with NPCI, will work towards taking UPI to 20 countries with an initiation timeline of 2024-25 and a completion timeline of 2028-29,” the report said.
During the last couple of months, NPCI entered into a partnership with Namibia and Peru to build such systems, popularly called digital public infrastructure or DPI that helps the public access and use digital tools to access government services. Aadhaar and UPI are examples of DPI that have been popular and have helped citizens access government services.
Apart from helping emerging economies develop their own real-time payments systems, NPCI has also been actively working with other countries to link UPI to their domestic systems to enable cross-border payments.
UPI is expected to surpass Mastercard's global daily transaction volume of 440 million sometime this year going by the 60 percent growth rate. Visa, the world's largest card network, processes an average of 750 million transactions per day globally.
UPI is estimated to have over 350 million unique users and around 80 million merchants deploying over 275 million QR codes across the country.
Notably, the technology stack architecture of NPCI—which runs the mobile payments system—allows for infinite scalability. The ability to think of the network effect of innovations also helps the organisation to bring out features that customers and its partners want the most.
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