July 4, 2022
India has shown improvement in digital payment options used in bill payments, channels for cross-border remittances, and ticketing systems for public transportation
E-money and customer protection are other parameters, for which India has achieved a leadership position
India has the third-largest number of ATMs globally
The country is exploring further actions to enhance cross-border payment arrangements
India has achieved a leadership position among large-value digital payment systems, according to a report titled ‘Benchmarking India’s Payment Systems’ from RBI.
The country has been categorised as a ‘Leader’ or ‘Strong’ in 25 indicators out of 40.
By making significant progress and moving to a leadership position in large-value payment systems and fast payment systems, India has contributed significantly to the rapid growth in digital payments.
Important headwinds
According to the report, India has shown improvement in digital payment options used in bill payments, channels for cross-border remittances, and ticketing systems for public transportation. E-money and customer protection are other parameters, for which India has achieved a leadership position.
Cash Withdrawals
India has the third-largest number of ATMs globally, as per the report. RuPay, the country’s domestic card network dominates the debit card segment. The share of card payments in all transactions stood at 14.7%. A single ATM was utilized by over 5,800 people inFY20.
Cash withdrawals in India are also conducted through other methods, such as Point-of-Sale (PoS) terminals and micro ATMs, that make use of Aadhaar Enabled Payment Systems (AePS).
Way Forward
The benchmarking exercise was initially conducted in 2019, to analyse the country’s position in 2017. It has been currently conducted again with regard to analysing the country’s position in 2020.
The report stated that the exercise’s learnings are anticipated to further enhance India’s payments ecosystem. The country’s regulatory environment is robust, and several proactive customer-focused initiatives are being implemented.
India is exploring further actions to enhance cross-border payment arrangements. To facilitate this, the measures include finding areas to interlink United Payments Interface (UPI) with fast payment systems in other jurisdictions, building on the UPI-PayNow interface, and improving customer convenience by increasing the prescribed limits for inward remittances using the Money Transfer Service Scheme (MTSS).
The report concludes that the internationalisation of the Indian Rupee (INR) will enable the Indian economy to integrate with the rest of the world at a greater level, in terms of foreign trade and international capital flows.