Digital Payments: The Road Ahead

The digital payment infrastructure in India has leapfrogged to a stupendous height.

- Saptarshi Roy Bardhan

It all began in the 1990s when the Reserve Bank of India (RBI) spearheaded the development of technological infrastructure that facilitated the creation of a payment and settlement ecosystem. In 2007, the Indian parliament passed the Payment and Settlement Systems Act, after which RBI released a series of vision documents for the periods of 2009-12, 2012-15, and 2015-18. These papers were supplemented by initiatives to promote wider acceptance and deeper penetration of electronic payments in India.

The real big push for digital payment came after the demonetisation in 2016. In the Unified Payment Interface (UPI), the flagship digital payment platform, which was launched in 2016, transactions have been growing month on month. It crossed 1 billion transactions for the first time in October 2019, almost three years after its launch. And, the next billion came in under a year, in October 2020. In the next 10 months i.e. in August 2021, UPI processed 3 billion transactions. And, it took only three months for the payments platform to reach 4 billion transactions per month. Add to it, the positive traction received from measures like the introduction of Real Time Gross Settlement (RTGS) in 2004, National Electronic Funds Transfer (NEFT) in 2005 and Immediate Payment Services (IMPS) in 2010 in expanding payment digitisation.