Speed and secure nature of UPI that has attracted India’s consumers towards adopting it as their preferred payment mode and I anticipate this to continue in the coming year as well.
Did you know that India had the highest number of real-time online transactions in 2020 at 25.5 billion real time payments transactions which was way ahead of US, UK and China? Today, we have the highest fintech adoption rate and are the 3rd largest fintech ecosystem globally?
This is no mean feat for a country that has been reliant on cash as a mode of transaction for decades now. Add to that the fact that India is one of the youngest populations in the world and has a burgeoning and aspirational middle class, the future looks promising for digital payments to take off in a big way in the coming years.
One needs to credit the banking regulator, the Reserve Bank of India (RBI) as well as the incumbent government for the several financial inclusion initiatives such as the Digital Saksharta Abhiyan (DISHA) and the setting up of the Payments Infrastructure Development Fund (PIDF) Scheme which will further strengthen the digital payments adoption in India.
Here are the 5 key trends that will shape India’s digital payment journey in 2022 to watch out for:
UPI – A fast-growing digital payments platform
The scale and speed at which UPI has exploded is phenomenal. Ten countries across the North and Southeast Asia will soon get to experience India’s digital payments success story, the Unified Payments Interface (UPI) which is an instant real-time payment system developed by the National Payments Corporation of India (NPCI) and introduced first in India in 2016. NPCI started off as a pilot launch with 21 member banks in 2016 and today has 274 participating banks and 4.18 billion monthly transactions worth Rs 7.68 trillion as of November 2021.
It is the ease of use, speed and secure nature of UPI that has attracted India’s consumers towards adopting it as their preferred payment mode and I anticipate this to continue in the coming year as well. We could also potentially see a return of revenue economics on UPI transactions, which could spell a boon for further ecosystem investments on platform.
Feature phone innovations – Moving closer to the vision of a less-cash economy
A lot has been said over the years to bring India’s vast population under the cashless ambit but very few efforts have been made in this regard. One of the promising ones is the recent announcement by the RBI where the banking regulator intends to bring India’s approximately 44 crore feature phone users into mainstream digital payments ecosystem. RBI announced this via its “Statement on Developmental and Regulatory Practices”, on December 8, 2021. This initiative by the RBI to introduce a UPI-based payments product on feature phones is commendable and will do wonders towards the vision of India becoming a truly less-cash economy.
Buy Now Pay Later (BNPL) – Continue to be massively popular among the middle class
As per an estimate by research firm Redseer, India’s BNPL market is expected to reach $45-50 billion by 2026 from the $3-3.5 billion currently.
At Pine Labs, the EMI instalment purchase option at the point-of-sale, popularly known as BNPL has been well appreciated by our merchant partners as it has helped them sell more, sell often to their customers. This year we even launched BNPL in Malaysia and have managed to bring onboard some reputed retail and banking partners to make it a huge success in Southeast Asia. What’s worked for is the seamless technology integration of BNPL offerings by leading brands and banks on a single PoS device, thereby giving our merchant partner the ability to offer EMIs during checkout and increase conversions to a great degree. Such transactions get processed under a minute on our terminals. This tech-first approach to enabling BNPL at the offline point-of-sale will continue to attract more consumers, and especially the rising and aspirational middle class of India.
Contactless Payments – Soaring in terms of usage
Another masterstroke by the RBI was the increase in contactless card payment limit (without needing a PIN) from the earlier INR 2,000 to INR 5,000 w.e.f. January 1, 2021. At Pine Labs, we were quick to follow this announcement with the launch of our very own contactless payment product called Pine Labs AllTap in the same month. This mobile payment app made contactless ‘tap and pay’ much secure as it came with a robust PCI SSC-compliant Contactless Payments on COTS (CPoC) solution that underwent an extensive audit and certification from PCI-SSC and leading networks like RuPay, American Express, Visa, and Mastercard.
Using our AllTap app, India’s small-scale merchants, self-employed individuals, and many other solopreneurs could easily accept contactless ‘tap and pay’ digital payments using just their NFC-enabled Android smartphone with no additional hardware requirement. This revolutionary mobile payment app recently won the “Most Innovative Fintech Product” award at India Fintech Forum’s IFTA 2021 event.
Today, consumers want to be in control of the payment process, and they have taken a liking to ‘scan and pay’ QR codes and ‘tap and pay’ contactless card payments. Expect this trend to continue in 2022 and more people will start joining the digital payment bandwagon through the contactless payments route. Convenience will continue to drive adoption of such modes of digital payments.
Offline to Online business:
The consumer adoption of digital payments and online shopping witnessed a huge surge during the pandemic. And to cater to this new set of digital enthusiasts, it will be imperative for businesses to migrate online. We now expect many more large brick & mortar retailers to establish an online presence thereby moving the world of online shopping beyond online marketplaces. With the simplified technology now allowing even small kiranas and next-door stores to establish a bespoke online store, display catalogue, accept orders and deliver at the doorstep, we expect that these tools will entail a combination of store builder-payments- delivery logistics that will power the neighborhood economy.
Digital Payments in India has seen a remarkable growth in recent years and is poised for further expansion as more tech-savvy young Indians take a liking for the innovative digital payment solutions being developed by fintechs in India. At Pine Labs, we will continue to invest in our technology and deliver innovative outcomes to empower our merchant partners with technology-first solutions.
Source: Business World