India is witnessing a digital revolution where we are increasingly becoming a cashless economy. One of the most significant aspects of this transformation is the rapid growth of digital cashless payments – thanks to UPI.
The Reserve Bank of India (RBI) has been at the forefront of this change, introducing measures to facilitate this shift.
One such initiative is RBI’s Digital Payments Index (RBI-DPI). Launched on January 1, 2021, the RBI-DPI is a comprehensive measure of the extent of digitization of payments across the country.
The index uses March 2018 as the base period and has shown significant growth since its inception, indicating an exponential increase in digital payments. The index for September 2023 stands at 418.77 as against 395.57 for March 2023.
Digital Payments Index Over The Years
Five parameters for going cashless
The RBI-DPI is based on five broad parameters.
The first, ‘Payment Enablers’, accounts for 25% of the index and includes factors like internet and mobile device penetration. (There are 85 crore Indians using the internet at the moment, who can use cashless payment modes!)
The second and third parameters, ‘Payment Infrastructure – Demand-side factors’ and ‘Payment Infrastructure – Supply-side factors’, account for 10% and 15% of the index respectively. These parameters consider the number of payment system participants and service providers. Think PhonePe, GPay, Amazon Pay and the likes!
‘Payment Performance’, which measures the volume and value of digital transactions, has the highest weightage at 45%. (Did you know you can transfer up to Rs 1 lakh using UPI? Also, cards are another great avenue for cashless payments)
The final parameter, ‘Consumer Centricity’, which measures the extent to which digital payment services are consumer-friendly, accounts for the remaining 5%. (Yes, even street vendors are accepting digital payments now!)
The international leap
The government’s push to make cross-border payments easy is also noteworthy. The country has also made significant strides in cross-border digital payments.
The RBI and Nepal Rastra Bank (NRB) have signed the Terms of Reference for the integration of India’s Unified Payments Interface (UPI) with Nepal’s National Payments Interface (NPI).
A lot of Nepalis working in India, who regularly use Indian banks to remit funds back home will be benefited from this development. They won’t need to go to the bank and stand in the queues anymore!
This instant, low-cost fund transfers between the two countries, will further deepen financial connectivity and reinforce the enduring historical, cultural, and economic ties between India and Nepal.
India and Singapore have already linked their respective digital payments systems, UPI and PayNow. This allows users to make quick, low-cost fund transfers between the two nations.
Indian cashless payments revolution on world stage
India’s achievements in digital payments have not gone unnoticed on the global stage. According to a 2023 MyGov India data, India topped the global rankings in digital payments. The country recorded whooping 89.5 million digital transactions in 2022. This volume was more than the combined digital payments made in the next four leading countries – Brazil, China, Thailand, and South Korea. India also accounted for 46% of all real-time payments made worldwide in 2022. Isn’t that great!
These developments underscore the robustness of India’s payment ecosystem and the country’s acceptance of digital transactions.
India’s journey towards a cashless economy is well underway, driven by robust digital payment infrastructure and a supportive regulatory environment. As digital payments continue to grow, they will play a crucial role in promoting financial inclusion and transforming India into a digital economy.
This is truly going to be India’s decade… or shall we say century?!
Disclaimer: This post is for informational purposes only. Not advice.
