Changing Digital Payments Landscape In India

02 / 09 / 2022

The digital payments space has seen a massive boom over the past few years, growing at a compound annual growth rate (CAGR) of 30 percent. By the year 2026, digital payments in India are set to reach $10 trillion in value from the current value of $3 trillion.


The digital payments space has seen a massive boom over the past few years, growing at a compound annual growth rate (CAGR) of 30 percent. By the year 2026, digital payments in India are set to reach $10 trillion in value from the current value of $3 trillion. The digital payment ecosystem shall continue to see growth and support from the expanding e-commerce marketplace and the wider availability of acceptance infrastructure at physical stores.

There has been a tremendous push by the government and RBI over the last decade to drive various digital initiatives that have been further fueled by the Digital India program. The timely and effective implementation of such initiatives is supporting the growth of the entire digital infrastructure in India including digital payments. Some of the key regulatory initiatives by the Government to boost digital payments growth include the New Umbrella Entities (NUE), Payments Infrastructure Development Fund (PIDF), tokenisation guidelines, and regulatory sandbox.

India continues to witness an upsurge in digital payment transactions. With the number of use cases of digital payments increasing drastically, it has become possible to offer customers a more user-centric and personalized experience. While UPI is the fastest growing payment mode, other payment modes and platforms such as cards, PoS terminals, QR Codes, buy now pay later (BNPL), NETC and BBPS have also seen steady growth.

Let me highlight the three key growth drivers of digital payments.

1. Change in customer payment behavior

Payment behaviour of Indian customers has seen a tectonic shift. The pandemic has played a crucial role where we saw people moved towards doing all their purchases and day-to-day essentials online, be it to pay utility bills, Grocery Delivery, Vegetable and Fruit Delivery, Home services like cleaning, durable repair, salon services, pest control, maintenance, and Pharmacy.

With the growing preference for contactless payments by consumers, integration of payment modes facilitated by FinTech and PayTech companies has led to ease of usage.

If you look at the growth of UPI, which has now emerged as the most preferred payment method, it recorded over 6.28 billion transactions in the month of July 2022.

The number of acceptance points for digital payments, both QR and physical Point of Sale (POS), has increased tremendously across the country. This has helped in driving digital payments in the offline space. The number of POS terminal deployments from March 2021 to March 2022 is 6.07 million which witnessed over 28% growth, as per India Digital Payments Report by Worldline.

2. Technology as a catalyst

Technology platforms are catalysing the digitisation of payment processes. Cloud hosting, open APIs, etc., are enabling players to provide platforms as a service and launch new product offerings. For example - Setting up an online store has become easier with platforms like Shopify, WooCommerce, and Magento. There are preferred shopping platforms for different product categories with features to support the same, e.g., food, apparel, cosmetics, jewellery, consumer electronics, etc. These platforms don’t require much coding, but they can be tactfully configured. They have built-in shopping carts and a provision for API integrations with payment providers and logistics providers, so that the entire fulfilment system is set up. Along with this, they also have a payment gateway plugin such as Worldline’s Next Gen Payment Gateway which is integrated with all the major platforms that provide multiple payment solutions.

Ecosystem-based platforms with embedded finance have emerged. For example, customers can make cashless payments within a ride-hailing app, in-game purchases in video games, live shopping, integration of e-wallets/BNPL in E-Commerce apps, subscription-based payments for SaaS, and many more.

Another disruption that is happening is Open Network for Digital Commerce (ONDC) – pitched as the UPI of e-commerce – a freely accessible government-backed platform that aims to democratise e-commerce by moving it from a platform-centric model to an open network.

3. Entry of a new breed of players

The digital payment space is attracting big techs and non-banking players. We are seeing the launch of different super apps from big tech conglomerates in India. Today, payment services are now being offered on messaging platforms like many social media messenger and video calling apps.

Some of the emerging business models like value-added services and cross-selling of products are growing at a rapid pace. In your day-to-day grocery purchase or ordering food, you might have noticed value-added services ranging from cashback and automatic discounts to coupons, redeeming reward points and cross-selling of products like branded credit cards, financing offers, and other similar services.


Technology advances will further propel the growth of the digital payment ecosystem in India. With the emergence of connected devices and people gradually upgrading to smart homes and connected cards, IoT embedded with payments will emerge as the next area of exploration. Also, leveraging artificial intelligence (AI)/machine learning (ML) solutions to analyse transaction data will provide deep insights into customer preferences.

Reference source: The Indian payments handbook – 2021-2026

Vishal Maru

Executive Vice President, Financial Institutions and Merchant Services, Worldline India

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