The government’s real-time payments system Unified Payments Interface (UPI) has continued to win over uncharted territories and grow M-o-M in terms of number and value of transactions. The growth is expected to continue to help it dominate 59% of the total payments in the country.
A report in Livemint quoted a Boston Consulting Group (BCG) presentation saying that between 2021-22 and 2024-25, the role of cash in the payments space will be meagre. The report said that UPI will dominate the payments space with 59% payments transactions. This would be followed by mobile and internet-based payments, which will constitute a fifth of the total number of cash and non-cash transactions.
The report further said that ATM transactions are expected to comprise 5% of total transactions between 2021-22 and 2024-25. It is being reported that the change in the payments landscape is a result of innovation coupled with the government and the banking regulator’s attempt to move to a ‘less-cash economy’.
The reports have surfaced that in 2018-19, the share of ATM transactions is the highest, followed by UPI-based digital payments with a 17% share, point of sale (PoS) machines (20%), and mobile and internet (13%), and cash comprising 5% of the total transactions.
Related Article: UPI Transactions Reach 955 Mn Despite Slowdown In September
It is to be noted that for July, UPI recorded 822.29 Mn transactions worth INR 1,46,386.54 Cr. The M-o-M growth was 8.97% for overall UPI transactions. Of this, PhonePe claimed to have recorded 335 Mn transactions, followed by Google Pay, which recorded over 300 Mn transactions and Paytm, which recorded 140 Mn UPI transactions.
In one of the upcoming players, WhatsApp payments, which was expected to be launched in May 2018, got stuck with the requirements of data localisation. However, with a user base of 400 Mn in India, the company is looking to launch payments services in next 3-6 months.
Recently, Reserve Bank of India (RBI) governor Shaktikanta Das said banks need to make the most of technological advances in the payments and lending space to compete with fintechs and bigtechs. Also, Nandan Nilekani-headed panel on digital payments suggested increasing the volume of digital payments by 10 times in the next three years.
It also suggested initiatives such as removing transaction charges on digital payments, simplifying Know Your Customer (KYC) processes, and reducing KYC costs for banks. The regulator has taken initiated action based on the committee’s recommendations.
According to NITI Aayog’s “Digital Payments (2018 edition)”, India’s digital payments industry is estimated to grow to $1 Tn by 2023. It also suggested that the value of digital payments will likely jump from the current 10% to over 25% by 2023.