India’s digital payments shift toward inclusion and security

By Vriti Gothi

India’s digital payments sector is entering a pivotal phase, with industry leaders highlighting an evolution that goes beyond adoption toward greater inclusion, security, and global interoperability. As the ecosystem matures, the focus is shifting to solutions that address structural access gaps, reinforce banking infrastructure, combat increasingly sophisticated fraud, and expand India’s footprint in international payments.

Savita Vashist, Co-founder and Executive Director at NPST, identifies four defining trends shaping the trajectory of digital payments. First, financial inclusion is being reimagined through voice-led payment solutions. With nearly 300 million feature-phone users and widespread 2G connectivity, a significant portion of India’s population remains outside app-based UPI. Initiatives such as UPI 123 aim to bridge this divide, enabling users without smartphones or those hesitant to use conventional digital interfaces to engage with digital finance. “India’s digital payments ecosystem is not merely expanding; it is undergoing a profound evolution characterised by deeper capability, broader inclusion, and more robust infrastructure,” Vashist said. She emphasized that achieving the Reserve Bank of India’s target of one billion digital payments users by 2029 will rely on such inclusive solutions.

Second, the globalisation of UPI is creating a foundation for faster, more efficient cross-border payments. This expansion opens new corridors for commerce and remittances, positioning India as a competitive player in the global payments landscape. Third, the banking layer itself is being strengthened through platforms like Banking Connect by NBBL, which provide a consistent, secure interface for users across diverse institutions. These upgrades modernize the net banking experience and reinforce the reliability of digital transactions.

Finally, fraud management has become a central focus. India recorded 2.4 million digital payments fraud cases in FY25, illustrating that traditional rules-based security is no longer sufficient. Vashist explained that AI-driven monitoring and machine learning are increasingly being deployed to detect anomalous behaviour in real time, providing proactive risk management while preserving user trust. “Embedding this security ensures sustained user trust and is fundamental to the continued scaling of India’s digital economy,” she added.

Industry executives also point to technological innovation as a key driver of the next wave of growth. Akash Sinha, CEO and Co-founder of Cashfree Payments, emphasized that the coming year will be defined by global interoperability and AI-powered intelligence. “As we move into 2026, the next wave will be defined by global interoperability, AI-driven intelligence, seamless cross-border commerce, and payment experiences designed for Tier 3 and beyond,” he said. Sinha highlighted the maturation of biometric identity systems and the growing adoption of embedded finance as factors enabling safer, faster, and smarter payment experiences.

Taken together, these developments suggest a strategic pivot for India’s digital payments ecosystem. The focus is shifting from rapid domestic adoption to building a scalable, secure, and inclusive infrastructure capable of supporting both domestic users and global commerce. Analysts note that this dual emphasis—on accessibility and technological sophistication—could position India as a global benchmark for digital payments, demonstrating how large-scale innovation can coexist with financial inclusion and robust risk management.

As the sector approaches 2026, the challenge will be to maintain a balance between rapid innovation and operational security. The strategic intent across the industry appears clear: expand access, integrate advanced technology, and reinforce trust, creating a payments ecosystem that is both universally accessible and globally competitive.