Digital payments have been a revolution or sort – these have made all sorts of payments relatively easy with just a few clicks on mobiles and PCs. Anytime, anywhere, to anyone.
With an intent to promote cashless transactions, the central government has introduced various measures to encourage citizens to make digital payments as an alternative to cash transactions.
Such measures have enabled India to take pole-position or leadership position in large-value digital payment systems. India has emerged as a leader in 25 out of 40 digital indicators which makes it possible for India to take leadership position. Still, there are few areas (ATMs, card payments efc.,) wherein, India has been categorized as “weak”.
These statistics are revealed by Reserve Bank of India (RBI) report on ‘Benchmarking India’s Payment Systems’ – The report is a comparative analysis of payments systems in India with other major countries.
Significant progress made by India in large value payment systems and fast payment systems (including e-money and customer protection) is prime reason for India’s tremendous success in digital payments arena.
One major area which required improvement is acceptance infrastructure (such ATMs and POS Terminals) – In 2021, India had introduced Infrastructure Development Fund (PIDF) to enhance the acceptance infrastructure. ATMs are still one of weak spots in Indian payment systems as per report in 2020, each ATM served only 5,800 in a given year which was dismissal given the population count and India’s position as third largest ATM’s network. However, presence of POS terminals and micro ATMs could ease concern surrounding ATMs.
Card payments is another area wherein India is in weak spot as share (14.7%) of card payments is second lowest in India’s overall payment system transactions. Rupay is a top performer in debit card segment and is below performer in credit card segment.
Certain measures (as provided below) are listed by the report to further make functioning of Indian’s payment system strong and sound:
a) With significant focus on cross border transactions across the globe, time for India to up its game in this segment to further strengthen its position and to remove roadblocks involved in such transactions – This can be achieved with development of fast paced UPI payment interface to link with fast payment systems in other jurisdictions, and enhancements of the prescribed limits for inward remittances using the Money Transfer Service Scheme (MTSS) to improve customer convenience.
b) Taking appropriate measures to deal with shortfalls learned from the benchmark report which will help in removing weak spots in India’s payments system.
c) Inception of new regulations and flawless implementation of existing regulations which are customer centric to ease painpoints involved in certain payment processes.
d) Making Indian rupee global is crucial to make Indian economy strong in terms of foreign trade and international capital flows. Recently, RBI has permitted to realize foreign payments in INR which is a welcome measure to curb rupee depreciation.
India is definitely on course to spotless payment system as central government has brought numerous digital and other initiatives to make payment process easy without any hassle – However, it is time for the central government to focus on weak spots in the payment systems and to develop a plan of action to remove such weak spots to establish robust payment system in India for the benefit of its citizens.
