Before demonetization happened back in 2016 in India where all ₹500 and ₹1,000 banknotes of the Mahatma Gandhi Series were discontinued overnight, digital payment systems like PayTm etc were there in the market but not super popular but immediately after the demonetization, online payment systems really took off especially UPI (Unified Payments Interface).
Currently India leads the world in digital payments and in ways to transfer money from one account to another. We started off with National Electronic Fund Transfer (NEFT) that allows a user to transfer money online to any bank that supports it and the transfer would complete within 24 hours. Shortly afterwards IMPS was introduced that allows a user to transfer money to another account instantaneously and whenever I have used it the money has been credited to the other account within a few seconds. Then we have UPI (Unified Payments Interface) which was launched on 11th April 2016 with the goal of making user to user payments easy & painless and supports person-to-merchant (P2M) and person-to-person (P2P) payments. In Dec 2022, 7828.9 Mn transactions were made with UPI for a value of 1,281,970.86 Cr (Rs. 1,281,970,86,00,000) and the total transactions using UPI were at 74,195.02 Millon which is more than the VISA + Mastercard transactions combined. More stats on UPI are available on the NCPI Website
People outside India have no idea how far UPI has changed the face of payments in India. You can go to a roadside shop in the smallest town in India and they are ready to accept payments using UPI. Last week we were in Yelagiri and one of our friends wanted to get a Tarot reading done by this lady sitting outside a temple we were visiting. She wasn’t carrying her wallet and asked if she could do an online payment and the lady immediately whipped out a QR code for her to scan and make a payment. Keep in mind that this is someone who charges Rs 50 for a reading and she loves online payments because it all goes to her account directly and she doesn’t have to worry about securing cash. Recently I went shopping in Bangalore and bought Rs 11 worth of stuff from a pharmacist and tried to pay with a Rs 20 note. I was told that they didn’t have change and was asked to pay online using UPI. So I asked them about online payments and the guy told me that only about 5-10% of people pay cash anymore and most prefer paying via UPI as it is more convenient. A similar story was shared by our neighborhood grocery shop as well. Cash is still in use but more and more people are moving to online payments just for the ease of use. Transactions from 5 Rs to multiple lakhs are done daily using UPI. (The only condition is that there should be a network/data connection available which is the case for most parts of India). If I run out of cash when traveling I just need my phone and can survive without having any cash on hand and it makes sharing/settling bills a breeze as everyone just transfers the money to one another instantly.
However, the west doesn’t want to acknowledge this and still thinks that people in India are living in the stoneage. If I was in the US I would need to use a third party system like Vinemo, PayPal etc to transfer money and they charge a transaction fees for each transaction. UPI on the other hand is free and is supported directly by the Bank/Credit card company. I can transfer money by scanning a QR code, or to a phone number that is connected to my UPI ID which in turn instantly credits the money to my bank account.
There is a privacy implication to this in that there is an electronic trail for every payment sent/received so if needed authorities can pull up all the data for a given user with a warrant. This also reduces the black money (money on which no tax is paid) to a minimum which allows the govt to tax the people correctly.
We Indians need to talk more about our accomplishments and especially success stories like UPI and similar stories as we are leading the world in this space and we should be proud of it.
Well this is all for now. Will write more later.
– Suramya