With digital payments glorifying the Indian payment landscape, Mobile-based payments and cards are the jewel in the crown of the FinTech industry. Rapid innovation and adaption of technology and government’s determined push towards making digital payments an everyday essential are the main reasons for stirring a change in the way people make payments.
Mobile Payments commenced the journey of making our lives easier in 2010 with the launch of Immediate Payment Service or IMPS by NPCI. The chief intention behind the comprehension of this service was the dire need of an interface with interoperability and IMPS was successful in proving its worth by establishing a whopping 2.76 trillion Indian rupees in transaction value, as of November 2020. The roll out of UPI or Unified Payments Interface in 2016 has been by far, the best and most convenient technological advancement in the FinTech arena.
With the roll out of UPI or Unified Payments Interface, in 2016, the digital payment landscape of India grew significantly. UPI is an instant real-time payment system which facilitates inter-bank transfer without the hassle of adding beneficiary account details. Developed to accept payments 24×7 for all 365 days a year, UPI allows you to accept digital payments through a Unique Virtual ID or a QR Code.
According to NPCI, UPI has recorded a massive 2.21 billion in transaction volume in November 2020 with some of the most used mobile applications functioning over UPI platform being BHIM, Google Pay, Paytm, PhonePe and WhatsApp Payments.
How Mobile Payment Service functions in the Indian landscape?
According to a recent report from KPMG, non-cash transactions are predicted to cultivate a growth of 20 percent by 2023, expecting much of this growth to be driven by mobile. Post the government’s cash crunch of 2016, which put all the high-denomination notes out of circulation overnight and forced the masses to resort to digital payment methods, led to a very big learning experience for the entire country.
Nevertheless, the growth of mobile payment options like UPI and IMPS grew significantly. Rapid smartphone growth receiving a boost from the telecom companies providing inexpensive 4G tariff plans, also added fuel to the fire. This led to a massive leap in UPI usage in 2016, estimated to jump from 103,000 transactions to 1.97 million in a matter of three months, which later grew significantly and crossed the 900-million mark.
While this development sounds striking, the industry consensus still holds digital payments accountable for merely 10 to 15% of all retail merchant transactions, with mobile payments still playing a second fiddle to credit and debit cards when measured in terms of value. Not more than a quarter of Indians own smartphones enriched with the capabilities to use mobile banking applications or other payment services like Paytm or Google Pay.
However, the key challenge that the mobile payment service faces isn’t just limited to getting the services in the customer’s hand. There is a crucial need to develop ‘super-apps’ which provides a gateway to availing multiple services, thereby enhancing customer experience which was formerly limited to the same. As quoted by KPMG’s Mr. Jain “There is a clear incentive for people to use super apps and there is a clear incentive for the ecosystem to adapt to them.”
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