Problems and Prospects of Digital Payments

Abstract

Demonetization, which was announced by Prime Minister Mr. Narendra Modi on November 8, 2016, has given India's digital payments industry a huge window of opportunity for expansion. As a result, it has given Indian consumers access to a distinctive digital payment network as a cash substitute. The growth of digital wallet businesses' market shares has benefited greatly from this. In particular, with the government's attempt to turn India into a cashless economy, leading to convenient spending and consumer transparency, there has been a massive growth in digital payments since the demonetization of high-value currency of Rs. 500 and Rs. 1000, which made up about 86% of the cash circulation. Numerous digital wallet providers, including Google Pay, Paytm, Mobikwik, PayPal, and others, have benefited from this opening. Instead of withdrawing cash from an ATM, many customers now use their debit cards to make direct payments at payment counters (PoS). As a result, debit card transactions have significantly increased while ATM transactions have remained stable. Through the Bharat Interface for Money (BHIM) and the Unified Payments Interface (UPI), the government has also promoted smartphone-based transactions. Both make use of the National Payments Corporation of India's Immediate Payment Service (IMPS) network.