The rise of Digital Currencies: What will Drive their Acceptance?

03 / 04 / 2023

Worldline's role in shaping digital currencies: Discover how Worldline is pioneering digital currency solutions in Europe and supporting the Reserve Bank of India's E-Rupee initiative. Explore secure and trusted digital payment systems for the future of finance.


The digital payments market is rapidly changing because of changing consumer behaviour, new regulations, the introduction of new payment methods and the entry of new players. The payment landscape has changed so much that it is no longer a single market. It has become an amalgamation of markets with each one having its dynamics.

The year 2022 has been a landmark year for digital payments as it marked the evolution of India from a cash-preferred nation to a digital payment nation or we can call ourselves a less-cash nation. What began with the launch of the United Payments Interface (UPI) in 2016 as a way to democratize payments has now become an inevitable part of every Indian household with access to the internet. Some of the important trends that we saw in 2022 are –

The government is modernizing the retail landscape by giving the local brick-and-mortar and mom-and-pop stores a level playing field through the Open Network for Digital Commerce (ONDC). The ONDC initiative will help local retailers become easily discoverable to potential buyers through a digital marketplace. It will help retailers overcome the roadblocks like cataloguing, inventory management, price discovery, warehousing, and payment systems that prevent them from going online earlier. It will create an end-to-end ecosystem for small retailers, creating opportunities for the entire supply chain.

The UPI transaction volume surged 91.11% and the UPI transaction value surged 74.83% in 2022, as per data from the National Payments Corporation of India (NPCI). This “volume over value” growth signifies a larger number of small-ticket transactions, highlighting the deep outreach in the domestic market. Linking government-backed RuPay credit cards to UPI, bringing short-term credit and reward points to UPI users with a credit card will further boost digital payments in India.

Expansion of merchant acceptance continues because of relevant regulatory and government interventions. The rapid deployment of QR codes is reducing the entry barriers for merchant acquirers and is rapidly picking up pace in terms of usage. The increasing deployment of POS terminals with value-added services (VAS) like billing solutions, GST solutions, expense-management apps and integrated payment solutions are helping in expanding the acceptance among merchants. As per the India Digital Payments Report Q3 2022 by Worldline India, as of June 2022, the total number of POS terminals deployed by merchant acquiring banks was 6.59 million; it increased by 43% growth in Q2 2022 compared to Q2 2021. PIDF ( Payment Infrastructure Development Fund) by the government is an incredible step in incentivizing the acquirers to expand their footprint in emerging geographies.

If we look at the year 2023, it will be an exhilarating phase in the growth of digital payments in India. Here are some of the emerging trends in the digital payments space for 2023:

Buy Now Pay Later (BPNL)

About 25 million people in India, mostly millennials, are rapidly choosing buy-now-pay-later (BNPL) over traditional credit cards due to their simplicity. Many Gen Z and millennial buyers use BNPL, which enables them to divide small purchases into manageable EMIs to be paid over three or more months of the interest-free period, for small purchases. People are now able to purchase products that were previously beyond their price range.

According to a report, BNPL currently accounts for 2% of all retail spending, with a projected increase to 7% over the following four years. It shows a significant growth opportunity and paves the way for more innovations to come.

Central Bank Digital Currency (CBDC)

CBDC is another trend that is gaining traction. CBDCs are digital representations of fiat money that are created and backed by central banks. CBDCs can completely change the way we make payments given the growing interest in digital currencies. This is advantageous to the country from both an efficiency as well as cost perspective. Because of instant settlement and high trust, this can be very useful, particularly in the hinterland areas.

Cross-Border Transaction

The digital payment ecosystem could go beyond increasing its domestic outreach and going global. The next disruptive trend could be democratizing cross-border payments through a network-centric approach. NPCI is now taking UPI International. Indian travellers can use UPI to pay in certain European countries, and also NRIs in listed countries can do UPI transactions through their NRO/NRE accounts. This is just the beginning of the new trend. NPCI envisions ‘becoming the best global payment network’ and for this, it shall expand its geographic reach by adding more countries to its ecosystem.

Recently, Worldline and NPCI International partnered to empower mobile payments for Indian tourists in Europe. The collaboration will see Worldline become the first EU acquirer to offer Unified Payments Interface (UPI) and RuPay, to European merchants whilst providing an opportunity for them to build on their Indian customer base.

Transaction via Wearables

Wearable technology has significantly increased in popularity in recent years. To mention a few, these include fitness bands, smart watches, tracking devices, cameras, and health monitoring devices. To enable contactless purchases without a card or a phone, Axis Bank has recently introduced a variety of wearable payment gadgets, including wristbands, keychains, and watch loops. Additionally, SBI in partnership with Titan launched a contactless payment watch. The wearables operate like standard debit cards and are directly linked to the consumers' bank accounts. They may be used at any retailer that supports contactless payments. According to a global research report, contactless payments are a key growth factor for digital payments in India going forward. Wearable technology is likely to further boost digital payments and will see other fintech players joining.

The future of payments is bright. With the rise of mobile and the explosion of e-commerce, the payments space is rapidly changing. The rise of contactless payments, biometrics, and digital currencies will also expand how we pay for goods and services.

Technology can harness the power of scaling and make digital inclusion possible. With its flexible, reliable, and agile PayTech solutions, Worldline is enabling and propelling the digital payments space in India.

Vishal Maru

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

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