Online or digital payments were available in India before. But because of the fragmented market, consumers could not wholly trust any source providing such online services; this also led to confusion and uncertainty about this new mode of payment. With online UPI, users could find a single platform where they could perform their online transactions, which made them trust this platform even more.
Online payment was developed in the early 2000s in India when payment gateways like PayPal, Citrus Pay, and Paytm were introduced. But these payment options were limited in usage, and the people of India needed to adopt them more widely. NPCI was introduced in 2010, leading to online payment’s increased popularity. Then NPCI first launched IMPS for immediate payment services, followed by the introduction of UPI in 2016. After UPI came into force, the instant money transfer system was changed completely, and people could rely on this payment gateway which eventually changed the Indian digital market.
Impacts of UPI
As we discussed earlier, the adoption of UPI has also been the most significant impact of UPI on India’s digital economy. The NPCI surveyed to know the actual numbers related to UPI, and it was found that UPI transactions grew from 0.1 billion in 2016 to over 3 billion as of 2021. The total value of UPI transactions also increased significantly from INR 0.5 trillion to INR 63.3 trillion. This extraordinary growth proves how consumers are getting comfortable with this new way of payment online.
The democratisation of electronic payments is another significant effect of UPI. UPI has made it possible for individuals from all walks of life, including those previously shut out of the formal banking system, to participate in digital payments. Low-income groups can use online UPI for transactions because they don’t need a certain amount of money in the user’s bank account. In addition, the online UPI app does away with the need for users to possess a credit or debit card—another obstacle to the widespread use of digital payments in the past.
One of the critical benefits of UPI is its security. UPI transactions are secured using multi-factor authentication, including device fingerprinting, secure PIN, and biometric authentication. Moreover, UPI allows users to create a unique virtual payment address (VPA) to be shared with anyone to receive payments. It ensures that your account is safe when you pay online.
Undoubtedly, UPI has played an essential role in India’s financial growth and has changed how Indians transact. This is a massive success for UPI mainly because the people of India love the traditional payment approach, and changing their mindset is a win for UPI. Many benefits come with online UPI payment, from ease and convenience and low transaction fees to exponential financial growth. The platform has motivated millions to use digital transaction methods and reduce cash transactions in the country. India is indeed on its way to becoming a digital economy, and the country’s economic growth and development are adding to it.