Digital Infrastructure The government has been driving the nation toward a revolution in digital payments by implementing several successful plans, directives, and laws. An ecosystem that has fostered a thriving digital payments infrastructure has been created by affordable payment infrastructure, rapidly expanding low-cost smartphone and internet accessibility, regulatory efforts to promote financial inclusion, a program for universal digital identity, and fintech-led, user-friendly, innovative digital products. Notably, innovative payment methods like online banking, mobile wallets, and the Unified Payments Interface (UPI) have been the main catalysts behind this revolution in digital payments.
In 2022, the usage of digital payments skyrocketed, with UPI becoming the norm. With the greatest simplicity, users may transfer money and make payments using the UPI real-time payment system. It has revolutionised domestic transactions in India, enabling secure and instant peer-to-peer payments, enabled by UPI ID, mobile number, or Virtual Payment Address (VPA). Addressing a multitude of challenges associated with accessing traditional banking services—such as geographical remoteness, lack of documentation, and financial illiteracy—UPI adopts an innovative approach to digital advancement.
This transformative strategy positions India at the forefront of facilitating financial transactions with unparalleled ease. UPI radically altered Indian commerce by facilitating easy, safe, and inclusive transactions, empowering millions of people and spurring economic expansion. Beyond facilitating peer-to-peer transactions, UPI opens doors to a wide array of financial services, encompassing digital payments for goods and services, utility bill payments, and even access to credit.
Accessibility of digital payment solutions for diverse demographics On a grassroots level, the penetration rate has become multifold. UPI makes sure that transactions proceed swiftly and without any delays, whether you need to transfer money to a buddy, pay a bill, or make a purchase. You may send and receive money at any time, including on weekends and holidays, thanks to UPI’s round-the-clock operation. You don’t have to wait for the following business day to make a payment or be constrained by banking hours. It may be used to make online purchases, pay bills, and make payments at nearby retailers. These days, a lot of establishments take contactless and easy UPI payments using QR codes.
“Peer-to-merchant (P2M) UPI transactions overtook peer-to-peer UPI transactions in volume in the second half of the calendar year 2022, signalling the deep entrenchments of UPI P2M transactions.” (Source – The Financial Express) 
UPI has acted as a catalyst for financial inclusion and empowerment for rickshaw pullers and small vendors, elevating their economic standing and bringing them into the formal financial ecosystem. Of what is considered to be the bottom rung of the supply chain ladder, Vegetable vendors and Kirana stores too have accessibility to UPI. Retailers may reach a wider audience and access a larger client base by accepting UPI payments. This is because UPI empowers the unbanked and underbanked population and does not have any restrictions. Small retailers now have an efficient and economical payment option with UPI. When compared to traditional payment methods, it lowers transaction costs and does away with the requirement for physical point-of-sale equipment, which helps businesses increase their client base, streamline operations, and lower the risk of handling cash.
Additionally, the network of hawkers, an unorganized segment of the economy including Roadside food stalls and rickshaw pullers have adopted digital payments. These small-scale establishments or hawkers profit from real-time settlements when they use UPI payments. Funds from customer transactions are directly credited to their bank accounts, eliminating the waiting period associated with traditional payment methods.
Retailers benefit from this improved cash flow since it guarantees prompt access to their profits. Data from the Reserve Bank of India (RBI), the country’s central bank, shows that between the financial year 2020/21 (FY20–21) and FY22–23, digital transactions across various retail and wholesale payment channels grew by more than 2.5 times by volume to 113.9 billion and are worth more than Rs2000tn ($24.14tn). Rickshaw drivers too support the shift from cash to digital transactions has not only curbed unnecessary spending but also increased their customer base, as passengers prefer the convenience of cashless payments.
Global Call
Positioning this as one of India’s notable success stories can contribute significantly to rendering the country’s economy more cashless. This achievement not only streamlines daily life but also places India at the forefront of evolving financial infrastructure. In alignment with the G20’s objective of enhancing cross-border payments in terms of speed, cost-efficiency, and transparency, the facilitation of cross-border transactions sets the stage for a transformative shift in international payments.
According to estimates from the Indian government, India currently holds a substantial share, approximately 40%, of global real-time digital payments. Initiatives are underway to enable UPI-based international payments, exemplified by the ongoing integration with Singapore’s PayNow system.
Conclusion
Fueling this digital surge, the Reserve Bank of India has actively cultivated ecosystems featuring a diverse range of digital payment options. These encompass the Unified Payments Interface (UPI), and RuPay, a significant player in the debit and credit card issuance landscape. In essence, the Reserve Bank of India has orchestrated a comprehensive framework that not only embraces cutting-edge digital payment technologies but also addresses financial inclusion by reaching marginalized areas.
