The 8th of November, 2016 will go down in history as an event that sparked the digital payment movement in India. The Narendra Modi-led banknote demonetization of 2016 paved the way for the growth of e-wallets, online payments, and e-challans but a drop in the growth rate to 7%. PayTM hit a record 5 million transactions in a day and 24,000 crores worth of transactions. So what are digital payments and the digital payment trends in India?
Digital payment is an umbrella term that defines various online instruments used to make the payments. There are numerous instruments under the digital payments bracket- e-wallets, banking cards, Aadhar enabled payment systems, internet banking, and a few others.
We’re living in an age where convenience has grown to become key and instant gratification is sought by all. We’re also learning to ‘trust’ technology more with each passing day. When you put all of these factors together, you get a whole generation of people and businesses that are inclined towards a cashless future. A future where salaries are transferred at the click of a button, payments are made at the drop of a hat and money can be moved around as quick as a wink.
These digital payment trends have tonnes of benefits, convenience being the biggest. As the e-commerce culture is picking up steam and growing at a rate of 51% annually in India, e-wallets make it even more convenient by taking out the need to fill forms and adhere to different payment norms that these platforms have. Most e-avenues have now incorporated these e-wallets in to their payment gateways.
It’s also a safer option when travelling. One can lose their phones/tablets, which act as digital wallets, get a new phone number, but they wouldn’t be harrowed with the responsibility of requesting for a new ‘e-wallet’ and waiting through that 5-10 day period for their new debit/credit cards.
The government is fuelling the digital payments in India with discounts such as the service tax waiver on card transactions up to Rs 2,000/-. One of the biggest boons of going digital is small gains through exact transactions. Be it an Uber/Ola trip or something as basic as ‘Paytm-ing’ your local vendor.
Tracking spends is another big advantage of going digital. One can keep a check on their spending and make financial plans accordingly.
Digital wallets are increasingly being made not just for basic financial transactions but to also authenticate the holder’s credentials. For example, a digital-wallet could potentially verify the age of the buyer to a store while purchasing alcohol. The system has already gained popularity in Japan, where digital wallets are known as “wallet mobiles”.
In 2017, mobile payment trends and digital wallets are a rising phenomena. The future holds safer, quicker and friendlier versions of these trends. Here’s what we should look out for in 2017:-
Implications for banks.
This digital revolution will leave all accustomed to quicker and efficient payments and transfers. We will soon be expecting the same from transaction banking, having experienced convenient retail banking, and that’s going to be a task that needs addressing. Nonetheless, it is a demand that will need innovation to meet.
The entry of non-bank players and new global demands are not limited to domestic payments: they will also affect cross-border payments. It remains expensive for customers, who also face numerous pain points (for example, lack of transparency and tracking, as well as slow processing times). However, the rise of nonbank players on the traditional cross-border turf is an interesting space to keep an eye on.
Modernisation of Domestic Payments
The needs of the customer are evolving faster than ever and a mobile payment trend is easy to pick up and start using. Banks now, have to develop a top-notch, user friendly and optimised product to show that even they can hold their own when it comes to prompt delivery of services.
In 2017, we’re going to see several players (private and government-run) that will try to break into this market. Innovation and novelty are factors that could influence this space heavily. Even though this trend caught on late with India it cannot be disputed that this digital future is just around the corner.