Emergence of Digital Payment Instruments in India as an Alternative to Cash – An Appraisal

Abstract

India had been primarily a cash-based economy, but with increasing technological advancement and focus on digitization in the recent years, the digital payments industry in India has undergone a transformation .Digital payments provide easier and quicker payment options to the consumers. They also reduce cash related issues like corruption and unaccountability. Internet brought in a massive shift from offline to mobile and online banking channels. Digital payments by way of instruments like NEFT, RTGS and IMPS have a steady increase in terms of volume of transactions. The introduction of National Payments Corporation of India’s Unified Payment Interface (UPI) has given a new dimension to the payments system. Growth of e-commerce platforms coupled with increased smart phone and internet penetration encouraged customers to use the digital platforms to a greater extent. It is a highly promising industry with convenience and competition shaping its future. This paper aims to study the growth of digital payment instruments which are used widely today namely,NEFT (National Electronic Fund Transfer), RTGS (Real Time Gross Settlement), IMPS (Instantaneous payment mode system), Mobile-wallets and UPI (Unified Payments Interface). An attempt has been made to perform a comparative analysis of volume of transactions done using these instruments to record their emergence, growth and trends. This study also attempts to examine the share of these instruments over the years and understand the preference of the people towards the different instruments.