Digital India Initiatives

[op-ed of the day] Business possibilities in a world of digital payments


From UPSC perspective, the following things are important :

Prelims level : Not much.

Mains level : Paper 3-Potentials of UPI in increasing digital payments.


UPI has brought digital payments to the common man and it has immense scope for growth.

Zero MDR rate

  • Recently the finance minister made the announcement of the zero merchant discount rate (MDR) policy for payments through RuPay debit cards and Unified Payments Interface (UPI) instruments.
  • What does it mean? This policy dictates that when a consumer pays a merchant using RuPay or UPI, the bank may not charge the merchant a commission on the sale value that it usually charges a merchant.
  • Criticism of the move: Critics of this policy lament that it would begin to reverse the progress India has made in recent years to expand the digital payments network.

Some facts and figures

  • Setting up of NPCI: In 2008 the National Payments Corporation of India (NPCI) was set up as an umbrella organization for operating retail payments and settlements in India
  • UPI:  In 2016, NPCI introduced UPI.
    • UPI has since registered 100 million users.
    • UPI now clocks more than 1 billion transactions every month.
  • Growth prospects for mobile payments: According to the NITI Aayog, mobile payments in India are expected to grow nearly 20-fold to $190 billion in the next three years.
  • Digital payment for the common man: There are 1 billion mobile phone users in India.
  • 420 million users have a feature phone, these users can use the *99# USSD service to dial into 13 different languages.
  • Which would connect them to UPI and brings digital payments to the common man.

Need for innovation

  • We are far behind: India is far behind china, where 55% of spending is done digitally, compared to only 11% in India.
    • The outlook for future growth is mind-boggling.
    • There is a need for innovation at three levels.
  • First level-Adoption
    • A better understanding of human behaviour, technology, use cases and dis-use cases will facilitate the 10x growth necessary in adoption rates to cover the entire population.
  • Second level-Policy
    • The government has the rare opportunity to develop a data-centric understanding of how the economy conducts itself and uses money, and can set taxes accordingly.
  • Third level-Technology
    • Voice for authentication: At the technology level, there is an opportunity to use voice as a means for authentication and conduct transactions across multiple local languages.
    • Data analysis: Copious amounts of data from payment transactions can be analysed to understand user needs and develop personalized loans and financial solutions at scale.

Taking UPI to Global Level

  • UPI in Singapore and UAE: The NCPI is gearing up to take UPI to other countries, beginning with Singapore and the United Arab Emirates.
    • NCPI is working with its counterpart in Singapore, the Network for Electronic Transfers for Singapore, to bring UPI live in Singapore.
  • The low hanging fruit is to provide payment solutions to Indians travelling abroad.
  • Competition with global peers: The bigger and tougher game is to increase its usage among local people in countries outside India.
    • This would put UPI in competition with the likes of PayPal and Skrill.


We have seen just the tip, albeit a very substantial tip, of the digital payments iceberg. In the coming years, young business leaders of today must learn to uncover the iceberg itself.





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