Until about a decade ago, India was a country that relied largely on cash payments and a digital payment system was a far-off dream for many. But with the demonetization as well as the huge strides in digital payment technology in the last few years, the cashless and digital economy of India has become a reality.
And while a huge advantage of the digital payment-based economy has been the ease of use and the convenience of making online payments for the users, there are far greater implications of the digital payment infrastructure than just making it easier for people to shop online.
Let’s take a look at some of the ways that the digital payment system in India has helped boost the Indian economy as well as the business sector.
UPI and its impact on the Indian economy
While digital wallets like Paytm were the first to enter the digital payment ecosystem in India, right after the demonetization, with aggressive marketing campaigns and drives, it wasn’t until UPI came along that India became truly digital.
UPI, a new and innovative digital payment infrastructure, created by the NPCI with the aim to digitize and centralize online payments in India, quickly became the most widely accepted and used payment option. UPI has eliminated the need for sharing sensitive bank details to make online payments. Instead, users can send and receive money directly using their bank accounts by simply sharing their UPI ID or VPA (virtual payment address).
With so many UPI-enabled apps now flooding the Indian market, such as Google Pay, PhonePe, Paytm, and more, more people than ever have begun to rely on UPI to make everyday payments, whether at the local Kirana stores or while shopping online on larger eCommerce sites.
With this growing reliance on digital payments like UPI, more Indians now have bank accounts, which means that UPI has helped to curb black money to a certain extent, while also promoting more accountable currency transactions.
Additionally, with the lower sections of society now also having access to digital payments, there is an increase in the number of people that now have access to the world of online businesses and services.
Business sectors that rely heavily on online payments, such as eCommerce websites, or online service providers like streaming services, and even the online gaming sector, have all benefitted from the increased use of UPI and similar digital payment systems. In fact, both online gaming apps as well as legal betting sites in India have enjoyed an increase in their popularity within the last few years, a part of which can be attributed to the introduction of UPI into the Indian gaming ecosystem.
Last but not least, the UPI infrastructure has also managed to reach the most rural backgrounds of the country, bringing them into the digital age. This has allowed a new portion of the Indian population to become eligible for small digital loans, which can help them in becoming entrepreneurs. These newly inaugurated entrepreneurs can help build an even more lucrative economy in smaller areas of the country, where all transactions were only dependent on cash for the longest time.
