Guwahati: A homegrown fast payment system developed by India has transformed commerce and attracted millions of people to the formal economy.
The government laid the “digital public infrastructure” framework and a strong public-private partnership built on it. It has improved the convenience of daily living made banking services like credit and savings available to millions more Indians and increased the reach of public policies and tax collection.
At the G20 Finance Ministers, PM Modi characterised the digital payment ecosystem as a free public benefit that has fundamentally altered Indian government, financial inclusion and ease of living. On top of the government-installed “train tracks” that make up the digital infrastructure, innovation is thought to be possible at a minimal cost.
Through this network, India has demonstrated on a previously unheard-of scale how quick technical advancement may accelerate economic growth even in poor countries with lagging physical infrastructure. India aspires to export this public-private model as it positions itself as a source of innovations that might help the world’s weaker countries.
Jan Dhan Accounts, Aadhar and Mobile, the three foundations that altered India’s whole economic ecology, are at the centre of this programme. To ensure that every adult Indian had access to a bank account, the PM Jan Dhan Yojana the first pillar was launched. 46.25 billion bank accounts have been opened as of 2022 with 56% of accounts being opened by women and 67 percent in rural and semi-urban areas totaling Rs. 1,73,954 crore.
Identity services were modified by the second Aadhar pillar. The Aadhar ID can be used with biometric IDs or two-factor authentication for online security. For organisations like banks and telcos, Aadhar-led authentication has emerged as a facilitator.
99 percent of adults have a biometric identity number with more than 1.3 billion IDs issued today.
The third pillar, dubbed “Mobile,” highlights the fundamental digital innovation in India’s telecom industry. The cost of data decreased by 95% after Reliance Jio’s disruptive entry into the market in 2016. As a result, everyone in India now has affordable access to the internet.
The National Payments Corporation of India (NPCI) pioneered UPI as a public-private partnership (PPP) with an interoperable platform. With no transaction fees, the platform provides services from hundreds of banks and dozens of mobile payment apps.
The value of instant digital transactions in India last year was far more than in the United States, Britain, Germany, and France. “Combine the four and multiply by four — it is more than that,” as one Indian cabinet minister, Ashwini Vaishnaw, told the World Economic Forum in January.
Yet, the robustness of the digital payment infrastructure is only one factor in the success of the digital payment system; another is the behavioural encouragement that led people to convert from cash to digital. Like any change in behaviour, it has to be built on the system’s credibility and accessibility through clever innovations that guarantee its applicability to its target audience.
Little and intriguing inventions like the small voice boxes offered by payment applications, which are a common sight at snack carts and tea stalls because the proprietors are usually too busy to check their phone after each minor transaction, are among them. When a payment is made via a QR code, a voice that sounds like Siri announces how much was paid out right away. This has aided in reducing mistrust among businesses that have long relied on cash transactions.
An iconic example of ecosystem thinking is the digital payment ecosystem in India where fundamental core assets and competencies were enhanced and had a beneficial knock-on effect. The result was a revolution in business, entrepreneurship, and consumption habits in India, making the country’s digital payment ecosystem a game-changer and an example for the rest of the world.