Journey from Cash to Cashless

One of these days, during our morning runs, an old uncle, a neighbor, fell unconscious and we had to rush him to the nearby hospital. After some checks, it was diagnosed that his sodium levels were low and the staff was able to get him back up quickly. When we were all set to leave, we figured that none of us were carrying our wallet. Before it would get embarrassing, I realized that I could make a UPI payment. Boom, we were out without any hassle.

This brings me to my point that – “Cash is not the king anymore” – with adoption of digital payments picking up at a rapid pace – everyone from vegetable vendor to a local tea-seller is adopting digital payments as a mode to move away from the cash crunch. The twin effects of demonetization and government initiatives such as Digital India in concurrence with regulatory reforms have enabled banks, fintech players and changing consumer expectations have redefined the digital payments marketplace.

Exponential Boost

The volume of digital transactions in the first six months of this financial year (FY 2018-19) touched 11.8 billion transactions and is on course to achieve its target of 30 billion digital payment transactions. “Trends around higher number of merchants being acquired for offline digital payments, adoption of national mobility card for toll and transit payments and further push on UPI through WhatsApp and Google show that going forward, the digital payments adoption is only going to increase,” said Vivek Belgavi, fintech leader at PwC India.

Optimism is also buoyed by the higher adoption of digital payments during the festive season sales. Card swipes at point of sales terminals dominated the non-cash payment segment. Debit and credit card transactions stood at about 2.9 billion, followed by mobile wallets at about 2.1 billion and UPI at 1.5 billion. Digital transactions alone have seen a growth of 35% in the first half of the financial year,” said Ritesh Pai, chief digital officer at Yes Bank. “Half of this growth has been driven by emerging payment systems such as UPI and IMPS. The usage of digital channels, especially mobile banking, has also grown 33% in the last six months, while debit card usage has increased 11.5% which is anyway going to increase in 2019.


Even with the steady growth of digital payment modes, key challenges are stalling their wider adoption in the country such cyber security, fraud prevention, KYC & authentication. Digital continues to be in a weaker position vis-a-vis cash, which doesn’t attract know-your-customer requirements for transactions less than Rs. 50,000 and has no direct cost to merchants or consumers. Lack of financial literacy, high cost of banking services and excessive regulatory requirements are the key constraints in the financial inclusion goal for India, the government think-tank said in its ‘Strategy for New India @75’ document. With the Supreme Court verdict on Aadhaar, Fintech firms have hit a roadblock in rolling out key services digitally.

Road Ahead

The ease-of-use and low cost of arbitration has helped Fintech firms scale rapidly and obtain customers. The NPCI-led UPI platform has been a major game changer in the digital payments space creating a world-class payments infrastructure that can be leveraged to provide high value financial services quickly and efficiently across verticals. RBI’s initiatives on dedicated, cost-free and expeditious grievance redressal mechanism through Ombudsman scheme will help in strengthening consumer trust & confidence in digital payments; guidelines details of the scheme would be notified by January-end as per RBI. Another giant step from RBI’s is constitution of a high-level committee under Aadhaar architect Nandan Nilekani to suggest measures to strengthen the safety and security of digital payments in the country. India’s draft Personal Data Protection Bill recommends critical personal data that will be defined by the government, to be stored and processed in the country. The Reserve Bank of India has already mandated payments companies and banks to store and process user data locally. Sweeping data privacy policy in Europe, “GDPR, has resulted in more digital transformation” and created room for development of artificial intelligence-based tools. The draft policy, which was initially planned to be placed in the Parliament during the Winter Session, is now scheduled in June, after the new government takes charge.

All these initiatives envisage to a high level of adoption by various stakeholders of the ecosystem and push towards rapid rollout of various digital payment services such as of utility bill payments, recharges, ticket booking, shopping, deals, offers, cashbacks and many more.

Hence, we can expect digital payment growth over the next three years in the range of 35% to 45%, better than the current range of 20% to 35% as per industry experts.

Decimal has been instrumental in Fintech revolution over decade now by digitizing BFSI through its world-class technology platforms offering faster go-live within customer budgets, adhering to regulatory compliances & security measures tightly plugged in. Get in touch: to be part of digital Fintech revolution.

Leave a Reply