It is well established in the history of mankind that every crisis is two edged swords be it the two world wars that the world has faced wrath of or the ongoing pandemic of Covid-19 from which the world is suffering on one hand they had shook the existing orders and equations of world from their core but on other hand they had also placed building blocks for new order and equations. Similarly, at this juncture of time even though Covid-19 has laid a siege on normal activities or functioning of the people but at the same time it has caused a faster rate of adoption of contactless payments. With the social distancing norms being followed across the country, people have restricted their physical contact. In this unprecedented situation, people are looking at Digital banking.
Digital Banking or use of Payment wallets has gained requisite impetus in India after the implementation of De monetisation by Union Government of India on 8th November 2016 when the Govt. had demonetised high value currency of INR 500 and INR 1,000.But from then we have seen a constant surge in the use of various E-payment applications.
Again, with announcement of country wide lockdown because of Covid-19 pandemic, Govt has laid restrictions on movement of people and they have adopted to changing realities by started doing the majority of their work from home. This has again provide a greater push towards use of Digital Banking and E- payment options. People who were earlier unwilling to accept Digital mode of banking, have found no other way but to accept this as the new normal.
As per Mastercard, India witnessed an increase of 200% in the contactless payments during the month of May. A consulting analyst firm forecasts the annual global contactless transactions to reach close to 6 trillion dollars in 2024, a significant increase from the present 2 trillion dollars in 2020.
Benefits of Digital Banking or by using E payment wallets:
- Convenient and Hassle Free: Making payment using various e payment options are much more convenient and hassle free than traditional mode.
- Faster: Payment by the use of E wallets are speedier than other available means.
- 24*7 Availability: These means of payment are available to you when you need them.
- Restricts Physical Contact: Most importantly these payment assists you is restricting your physical contact and helps you in reducing risk of getting infected which is of very much important today.
- Secure: Making payment with UPI will require a unique PIN which is set by you so it is quiet impossible for anyone to get that and reduces the chances of burglary and forgery.
Emerging opportunities
The use of Digital payment or E payment has not only gain acceptance by common people but the market has responded favourable to them as well in terms of investment and tie ups.
Following are the reasons which help you to under stand the growth potential of this particular segment:
- Growth of Middle Class: Middle class of the country has accepted these payment means and with the growth of this particular class of population will also further the prospect of this business.
- E commerce Acceleration: With the rapid expansion of E commerce platform the popularity of E payment is increasing day by day as a result large E-commerce players have launched their separate platform like Amazon pay.
- Rapid Banking: Provision of banking facilities to the people in rural areas or people of lower middle class has also widen the market of digital payment options.
- Rural Economy: Steps are being taken to revive the rural economy of the country a which again will be add on for the prospected e payment platforms.
- Investment Inflow: Companies or Start-ups providing E payment wallets services are becoming lucrative investment options for worldwide investors as a result this particular business segment has seen a huge capital inflow in recent past.
Role of the Government and the RBI
As discussed, earlier Government and RBI have to play a significant role at a time when there is a definite paradigm shift to digital banking. They have also recognised the importance of digital banking and hence provided options of E payment for tax payment, payment of fines or other regulatory payments. But at the same time, they need to balance regulations where they are not burdening the financial institutions with one regulation after the other, but they must also ensure that the rules and regulations are not relaxed in a way that disrupts the competitive environment within the banking sector.
The government must also ensure that awareness is also made to the public while using Digitized banking. RBI had recently released a notification on the importance of making safe and secure contactless payments considering the rise of fraud in these times.
Way Forward
In this era of technology were the developed countries are stressing on the use of crypto currencies like Bitcoin opting for digital payment or e payment is considered as minimal effort one should take to adopt and survive with the changing world. With the whole world is considering to reduce their dependency on paper currency we as a nation must also follow them to stay relevant in the global arena.