Rowing through the troubled waters of 2020, Indian payments industry stumbled upon newer ways to work through the unexpected twists and turns of the pandemic. As the pandemic restrained the Indians to their homes, limiting their access to essential services, technology played a crucial role in ensuring a seamless continuity throughout.
Keeping up with the need of the hour, the Payments industry evolved a number of trends to rise through the pandemic and post-pandemic needs of both businesses and consumers. Digital payments witnessed a surge like never before, thrusting it way through the rudimentary and archaic cash transactions.
But as the year comes to an end, the hope and aspirations towards a glorious new year surrounds people. Here are some of the predictions for a bedazzling 2021 on the digital payments front that we can expect to see.
UPI: Escalating in leaps and bounds- Unified Payments Interface has constantly been breaking all records throughout 2020 and according to the experts it is expected to continue its manoeuvre in 2021, as well. UPI recorded 2234.16 million transactions at the end of December 2020 and have regularly been crossing the two billion mark in terms of transaction volume, every month. In October 2020, it crossed the following mark for the first time ever. Being a low cost, easy medium of online financial transactions, UPI’s fame has spread far and wide where other countries are starting to develop a similar platform. This sure paves a glorious way for UPI in near future.
Tap and Go: Welcomed with open arms- Contactless payments received much appreciation from the Indians during the pandemic, with an escalation to 15x in a matter of months. Realising the adaption by the masses and giving a boost to the digital, tap and pay, government increased the limit from INR 2000 to INR 5000 for payments without any PIN from January 1, 2021.
P2P Payments and open API Payments: Quick innovations and adoption- In the last decade we have seen several innovations in P2P payments and the following decade is expected to welcome an emergence of innovations for the B2B payments segment. Large corporates and mid-sized businesses will also adopt open API banking for payments and trade based collaborations, says CEO and MD of Infrasoft Technologies.
Password-less: A new possibility- To make the payments process a smooth affair, people may soon go password-less but with a stronger shift to biometric, enhancing the security system for the digital sector. With FinTech and mobile banking services bringing banking and payments to our fingertips, essential security measures must be put in place to avoid fraud and theft. This is where biometric security systems have emergered as a reliable and foolproof measure, taking security to the next level.
Digital Payments: The growing default way to pay- Undeniably, there is no reverse gear to 2020 in terms of digital payments evolution. Several technologies have gained traction during the pandemic and made us realise just how simple and essential switching to digital platform is. With contactless, POS payments and financing platforms will each undergo major transformation to ensure that the digital options are the first preferred options. A rise in wallets will also become a preferable and convenient method for customers to make purchases.
Contactless and Quick Payments: Surge unfolds- With the pandemic situation at hand, the digital payments infrastructure supporting quick and contactless online commerce in this continued ‘at home’ situation is definitely expected to see a swifter adoption from the small businesses. Mswipe CEO, Manish Patel presumes that contactless and quick forms of digital payments can be done anytime, anywhere and will become the norm for payment players as more SMEs in India are expected to go digital by 2021. In addition to this, the government’s continued push towards mandatory FASTag for every vehicle will sure drive digital payments to newer heights. Scan and Pay technology is also estimated to take off as demand for contactless payments will soon become the most preferred payment mode for consumers.
Open banking: A revolutionary way- Another exciting technology adding to our charts is open banking. Open banking brings both banks and FinTech together by facilitating data network across institutions and is related to Second Payment Services Directive. This technology forces banks to release data in a standardized, secured form, making information sharing between authorised online organisations, easy. Also, with the help of APIs and AI, open banking enables to control consumers’ banking along with financial information through third-party applications. Prediction states that open banking will reach USD 43.15 billions by the year 2026, growing at the CAGR of 24.4%
Cross-border payments: A Seamless affair- Contactless payments have accelerated a demand for virtual payment options like cross border payments, where worldwide transaction value of global transfers touched almost USD88 billion in 2020 which was a 10% year-over-year growth. Future cross border payments will be all about expanding options for both payee and payer, allowing seamless fund deposit by recipients into any bank account, online spend and fund transfer anywhere in a variety of currencies. It will also simplify the process by eliminating lack of transparency, high transaction fee and longer wait time.
Buy now, pay later: A strong emerging option- The system of a virtual credit system has nevertheless awed the consumers. With digital acceleration, the buy now, pay later option is becoming popular with multiple start-ups, allowing customers to make purchases without paying the entire amount upfront. It provides flexibility and small loans instantly to the customers without them breaking the banks.
RBI’s new yardstick to measure digital payments growth- A Digital Payments Index was rolled out by RBI to measure the growth of cashless transactions in India. This index comprises of 5 parameters, measuring the penetration of digital payments in the country. This includes;
- Payment enablers
- Payment infrastructure- demand-side factors
- Payment infrastructure- supply-side factors
- Payment performance
- Consumer centricity
As we finally step into the year 2021, we are sure to experience the aforementioned Fintech trends and predictions making our lives better, resulting more transparency, faster transaction processing, improved client assistance and augmented availability of financial data. 2021 is certainly going to be the year of action-packed FinTech revolution and will disrupt the banking and payments industry. But with these advantageous predictions, make sure you are not left behind. Empower your business with secured, simple and convenient digital payment solutions of Atom Technologies for a brighter, advantageous new year for your business.