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Why is India a global leader in payment systems?

By Puja Sharma

July 05, 2022

  • ATM
  • BRICS
  • Card Payments
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RBI, payment

The exercise was conducted for 21 countries, (including advanced economy countries, Asian economies, and BRICS (Brazil, Russia, India, China, and South Africa) nations), where payment systems were considered robust, diverse, and efficient.

The payments landscape across the world is developing at a rapid pace with various innovative payment systems and instruments being introduced frequently. This exercise of benchmarking India’s payment systems aims to assess the progress of India’s payments ecosystem against other major countries as also ascertain the strengths and shortcomings of the Indian payments ecosystem, the RBI noted in a public statement.

The exercise also seeks to examine the user preferences for payment systems and instruments vis-a-vis other jurisdictions. Learnings from the exercise are expected to further facilitate improvements in the payments landscape in India.

The pilot exercise for benchmarking India’s payment systems was undertaken in 2019. The exercise was conducted for 21 countries, (including advanced economy countries, Asian economies, and BRICS (Brazil, Russia, India, China, and South Africa) nations), where payment systems were considered robust, diverse, and efficient. The present exercise is a follow-on benchmarking exercise undertaken to examine the present relative position of the benchmarked countries and progress since the publication of the last report.

The Reserve Bank of India (RBI) has relied on publicly available information and made all reasonable efforts to ensure that the information in the report is accurate.

“It is heartening to see India’s payments performance jump to being a leader in 16 different indicators and strong in 9 out of the 40 different payments indicators. Non-cash payments have seen one of the highest CAGR amongst the benchmarked countries, but there is scope to improvise in areas such as People per ATM, People per POS terminals, and actual card payments. Publishing the Digital Payment Index (DPI) is a great step towards realizing the 3x Digital transactions target set in RBIs 2025 Payments Vision Document.” said Pranay Jhaveri,  Managing Director – India & South Asia, Euronet Worldwide.

 The payments ecosystem in India has witnessed rapid development with the availability of multiple payment systems and platforms, payment products, and services for different categories of consumers – individuals, firms, corporates, government, and other economic agents alike.

Over the years, payment system features, viz. availability, repetitive payments, contactless payments, offline payments, tokenisation, etc., have been enriching payment to enhance customer convenience while maintaining confidence in systems by ensuring requisite safety, security, and efficiency measures. The benchmarking exercise compares the payments ecosystem in India vis-à-vis other jurisdictions to ascertain the position of the payments landscape in India and examine how it fares when compared with other countries. In this context, benchmarking of India’s payment systems was initiated in 2019 and this follow-on exercise is being undertaken to measure the progress since the initial exercise and examine the recent trends in payments, both in India and the world.

The payments landscape has expanded with the launch and acceptance of new modes of payment in the retail payment segment, which include:

  • Mobile phones as a channel for making and receiving payments (mobile payments),
  • Internet for making purchases over different types of devices (internet payments),
  • Payment cards in ATM / PoS including using contactless technology (card payments and tokenisation), and
  • Various systems and platforms for making instant payments and electronic billing.

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