Digital payments Impact on Indian Economy through Banking systems & Global Comparisons

Abstract

India’s financial sector has witnessed a significant digital transformation, particularly in the realm of payments. The shift towards digital payment systems has reshaped transactional practices and contributed to financial inclusion. The adoption of digital payment systems like UPI and e-wallets has led to a surge in online transaction volumes, indicating a gradual move towards a cashless economy. Government initiatives and the COVID-19 pandemic have played crucial roles in promoting digital payments. However, challenges remain in achieving complete financial inclusion with approximately 190 million unbanked adults in India. Fintech companies are addressing this by providing a wide range of financial services and utilizing alternative data sources to evaluate creditworthiness. The key factors driving the adoption of digital payments in India include increased awareness, favorable government policies, quick onboarding and ease of use, smartphone proliferation and internet expansion, regulatory support, and improved technology. These factors, coupled with the enabling role of various entities and technologies, are shaping the future of digital payments in India. The rapid growth of digital payment systems, driven by a combination of technological advancements, government initiatives, and changing consumer preferences, is revolutionizing the financial landscape. As the fintech sector continues to evolve, it promises to bring about further innovations, making financial services more accessible and inclusive. The journey towards a digital economy is well underway, and with continued efforts, India is poised to emerge as a global leader in digital payments. The impact of this digital revolution extends beyond the financial sector, influencing various aspects of the economy and society, and paving the way for a more inclusive and efficient future.