India’s rapid adoption of digital payments has helped the country lead the way in terms of the digitization of the economy among its peers. India’s digital transformation journey has seen remarkable growth over the years, which reflects the country’s growing adoption of digital technology. A recent report by Indian Economic Pulse found that India had made digital payments worth Rs 23.2 lakh crore by July 2024, of which India’s indigenous digital payment platform ‘UPI’ contributed the most.
This shows significant progress made in various digital payment sectors, which impacts India’s financial and economic landscape growth.
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Record-breaking digital retail payments
India’s total digital retail payments reached an all-time high of Rs 2.3 lakh crore in July 2024. This surge highlights a significant shift in the way Indian consumers and businesses engage in financial transactions. As more consumers adopt digital solutions, traditional cash-based payments are increasingly being replaced, allowing for greater ease and transparency in the economy.
UPI: The Real Hero In India’s Digital Growth Story
Unified Payments Interface (UPI), one of the leading segments in digital payments, grew by more than 37% in the first quarter of FY25 (April 2024) over the same period in FY24. Demonstrating its significant role in India’s digital ecosystem, UPI remains the world’s largest digital payment system. The seamless nature of UPI transactions is fuelling the growth of e-commerce and reflects a larger cultural shift towards cashless payments across the country.
According to the ‘Indian Economic Pulse Report’, UPI contributed 89% of the Rs 23 lakh crore digital payments in July. The report also claimed that the platform has been contributing over 80% in digital payments since April 2023. Cards and digital wallets’ contribution numbers remained at just 11% in July 2024.
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Financial inclusion via Pradhan Mantri Jan Dhan Yojana
The Pradhan Mantri Jan Dhan Yojana has grown to become the world’s biggest financial inclusion initiative. As of August 2024, the scheme had benefited 53 million people and saved Rs 2.3 lakh crore. Further, Rs 36.14 crore debit cards have been issued under the initiative, providing individuals access to formal banking services and enabling financial inclusion for millions of Indians.
Jan Dhan Aadhaar Mobile and Direct Transfers
The government’s Jan Dhan Aadhaar Mobile (JAM) trinity implementation has transformed the transfer of subsidies and payments so that Direct Benefit Transfer (DBT) reaches beneficiaries’ accounts without intermediaries. By using the synergies between Aadhaar, mobile connectivity, and Jan Dhan accounts, the government has been able to reduce leakages in welfare schemes and empower beneficiaries with digital financial tools.
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FASTags – Boosting toll revenue and seamless movement on highways
The growing adoption of FASTags in India is another indicator of the increasing digitization of services. With a compound annual growth rate (CAGR) of 38% over the last three years (July 2021 to July 2024), FASTags have made a significant contribution to increasing toll revenue, easing congestion at toll plazas, and offering a more efficient way to manage road infrastructure payments. This growth highlights the transformative power of digital solutions in sectors beyond traditional retail payments.
India’s digital payments ecosystem is thriving, driven by UPI, FAStags, and other government initiatives that highlight the country’s shift towards a cashless economy. The growing adoption of digital platforms reflects a bright future where financial inclusion, transparency, and efficiency will play a key role in shaping the country’s economic growth.
