India is undergoing a significant transformation in its digital payment landscape, solidifying its position as a global leader in the sector. The recent surge in transaction volumes, which have increased by 42% year-on-year for the fiscal year 2023-2024, can be attributed to the widespread use of platforms such as the Unified Payments Interface (UPI), RuPay, and FASTag. This information comes from a report by PwC, which forecasts that transaction volumes are anticipated to rise dramatically from 159 billion in FY 2023-2024 to an impressive 481 billion by FY 2028-2029.
One of the most notable developments in this transformation is the rapid expansion of the Bharat Bill Payment System (BBPS), which currently boasts over 22,000 billers onboard. This number is expected to grow substantially, enhancing the payment landscape through an influx of more billers and categories, thereby facilitating a surge in transaction volumes. Additionally, the introduction of the NBBL Bharat Connect platform is set to streamline business-to-business (B2B) payments and provide credit access to India's vast micro, small, and medium enterprises (MSMEs), which number approximately 6.3 crore. Rohit Mahajan, Co-Founder of PlutosOne, highlighted the impact of this system, stating, "This system will change the way businesses manage payments, making transactions faster and more efficient."
The rise of Fastag is another notable trend, with projections indicating that by 2025, Fastag is expected to surpass over 100 million active users and facilitate more than one billion toll transactions each month. Mahajan pointed out that this growth underscores the integration of digital payments into everyday transactions, reflecting a broader shift in consumer behaviour.
As the digital payment landscape continues to expand, security remains a paramount concern. The deployment of AI-powered solutions, such as natural language processing (NLP), deep learning (DL), and machine learning (ML), are being leveraged to mitigate fraud risks, particularly in critical sectors like banking, finance, and e-commerce. Mahajan asserted the necessity of collaboration among banks, fintech companies, and regulators, noting, "These partnerships are crucial in strengthening security while fostering an inclusive and innovative financial ecosystem."
UPI has further demonstrated its significance with an impressive global reach that extends to nations such as Sri Lanka, Mauritius, and the UAE. In November 2024 alone, UPI processed a staggering 15.48 billion transactions, amounting to ₹21.55 lakh crore. The introduction of UPI 123Pay, which allows transactions without requiring smartphone access or internet connectivity, has proven to be a transformative measure to enhance the access to digital payments across diverse demographics. Mahajan described UPI's impact, stating, "UPI is reshaping how people and businesses interact, offering a simple and convenient way to make transactions." Recent enhancements, including increased transaction limits for UPI 123Pay and UPI Lite wallets, particularly benefit users in rural areas.
The increasing popularity of buy now, pay later (BNPL) services further reflects a significant shift towards digital-first credit solutions in India. While BNPL facilitates short-term, interest-free credit for online purchases, Mahajan cautioned users to be informed about the specific terms before proceeding with this payment method, emphasising the importance of understanding factors such as interest rates, repayment terms, and overall affordability.
Moreover, QR code-based payments are playing an essential role in improving convenience for small businesses, with projections indicating that person-to-merchant (P2M) transactions could account for 75% of all UPI transactions by 2025. The rollout of NBBL Bharat Connect QR, which allows billers to transform offline collections into digital payments, is a significant advancement in streamlining digital transactions. Mahajan remarked on the implications of QR code payments, highlighting that they "are making it easier for both consumers and merchants to adopt digital payments, improving overall convenience."
As these trends in AI automation and digital payments evolve, they are poised to reshape business practices, enhancing efficiency and accessibility across various sectors of the economy.
Source: Noah Wire Services