Wednesday, 09 Oct, 2024
Source: Wikimedia Commons
India's digital payments have surged, with a 50% CAGR in volume and 10% in value over seven years. Around 164 billion transactions worth Rs 2,428 lakh crore were processed in 2023-24, signalling a rapid expansion of the country's digital payment ecosystem.
Digitalisation has immensely reshaped the global economy, driving growth, employment, consumer welfare, and living standards. India stands out in this transformation with its innovative India Stack, a burgeoning Fintech sector, and a growing tech-savvy population. With expanding internet and mobile connectivity, these factors are propelling India to become the world's fastest-growing digital economy.
New Delhi is at the forefront of this digital revolution, overhauling banking infrastructure and public finance management through innovations in direct benefit transfers and tax collection systems. The digital economy now represents around 10 per cent of India's GDP (gross domestic product), with projections to reach 20 per cent by 2026, according to the RBI's Currency and Finance 2023-24 report published on July 29. Internet penetration in India reached 55 per cent in 2023, with the user base expanding by 199 million over the past three years, as reported by the Internet and Mobile Association of India (IAMAI). India enjoys the lowest global data costs, averaging Rs 13.32 ($0.16) per gigabyte (GB), and ranks among the highest in mobile data consumption, averaging 24.1 GB per user per month in 2023. Additionally, India is expected to become the second-largest smartphone manufacturer within the next five years.
India is leveraging late-mover advantages to become the fastest-growing digital economy, with a digital ecosystem projected to surpass $ 1 trillion by 2025, according to the Ministry of Electronics and Information Technology (MeitY).
India, home to the world's third-largest startup ecosystem, hosts over 140,000 startups and more than 100 unicorns. The tech-centric startup landscape encompasses sectors such as Fintech, gaming, software-as-a-service (SaaS), logistics, healthcare, edtech, and e-commerce. Public-private collaboration has been key to India's digitalisation, with government initiatives like "Digital India" expanding infrastructure nationwide. Further reforms, including the Open Network for Digital Commerce (ONDC), the BharatNet project, and investments in 5G and 6G infrastructure, are underway.
India leads the world with a 48.5 per cent share in global real-time payments volume (ACI Worldwide, 2024). Global remittances, increasingly facilitated by mobile and digital platforms, reached an estimated $857.3 billion in 2023, with India at the forefront at $115.3 billion. Fintech investments globally stood at $61 billion in 2023, with India attracting $2.6 billion. Major technology firms are also entering the financial sector.
Digital payments in India have recorded a compound annual growth rate (CAGR) of 50 per cent in volume and 10 per cent in value terms over the past seven years, encompassing 164 billion transactions worth Rs 2,428 lakh crore in 2023-24. Payment infrastructure has been bolstered by the Payment Infrastructure Development Fund (PIDF). The Unified Payments Interface (UPI) has seen a tenfold increase in volume over the past four years, from 12.5 billion transactions in 2019-20 to 131 billion in 2023-24, accounting for 80 per cent of all digital payment volumes. As of June 2024, UPI is recording nearly 14 billion transactions monthly, supported by 424 million unique users. The dominance of peer-to-merchant (P2M) transactions over peer-to-peer (P2P) transactions indicates high usage for small-value transactions.
