When India introduced its harsh cash ban in November 2016, a shift towards digital payments and a transformation to a cashless society was not the nation’s original goal.
However, upon banknotes becoming suddenly scarce, a new path was paved for digital wallets, as a consequence, added as an afterthought to partly validate the state’s exaggerated decision.
Mobile payments were initially introduced a few months ahead of the cash ban, and were referred to as a unified payment interface, or UPI.
This UPI allowed smartphone users to request payments or initiate payments to and from other mobile users who are clients of different banks. The only information required from each party would be their mobile number, or virtual ID. Users were not even required to utilise the same mobile application in order to perform the transaction. The idea was simple.
Following the launch, India led the way out of all Asian countries in terms of mobile payment developments, surpassing even tech hubs such as Singapore and Hong Kong. UPI has since ballooned in popularity, inviting over 140 Indian banks to share the interface.
In less than three years, UPI has flourished, recording a whopping 800 million transactions made per month. The growth has been lifted by increased smartphone use and crashing data costs.
Nandan Nilekani, a tech businessman known for creating the world’s largest repository of citizens’ biometric data, has now established a committee set up by the central bank, which seeks to widen the platform to foreign-currency transactions, inviting the migration of non-Indian residents and assisting nationals when travelling overseas.
“This is like Chinese users being able to use WeChat in many jurisdictions,” said Nilekani’s panel as reported earlier in June.
Despite India’s controversial move to ban its currency, cash is still dominant. However, mobile payments have grown five-fold in five years, with the annual per capita digital transactions reaching 22. The South-Asian country still lags behind Indonesia with 34 and Singapore with 782, as per 2017 figures. Nilekani’s panel wants to increase the number to 220 by March 2021.
In an emerging economy with countless transactions, a population of 1.3 billion and fair competition between local players and global technology, 10-fold growth may not be so far-fetched.
India going cashless can be more than a pipeline dream, and this time, the outcome could potentially be more positive.