Though cash remains the king in India, the coronavirus pandemic has proved an accelerator for the adoption of digital payments.
Though cash remains the king in India, the coronavirus pandemic has proved an accelerator for the adoption of digital payments systems. According to the Bank for International Settlements (BIS), digital transactions in India increased by 55 percent in 2020 as compared to 48 percent in China.
The trend is expected to continue, according to experts.
Here are some of the digital payment trends expected in 2021:
The UPI momentum
According to Mandar Agashe, Founder, MD & Vice Chairman, Sarvatra Technologies, UPI has been breaking records through 2020, and this momentum is likely to continue in 2021 as well, moving beyond the urban stratum.
“The e-commerce boom will facilitate UPI penetration in rural regions as well due to its ease of usage and interoperability,” opines Agashe.
Tap and go payments to take off in 2021
Contactless payments, Agashe says, became the norm in 2020, and now that the transaction limit is going to be increased from Rs 2,000 to 5,000, it is likely to boost adoption among the masses.
“Since tap-and-go technology is also enabled without internet connectivity, cashless transactions in areas with erratic connection will also see a significant rise,” he opines.
Pre-paid cards may gain traction
Pre-paid cards are another digital payment trend that is likely to gain traction in the coming year.
“Through pre-paid payment instruments, users can mitigate risk by loading a certain amount of money, post which cards can be used both online and at retail outlets. Since customers can load money as per their requirement, overspending online can be avoided, reducing liability to the balance in the card,” Agashe suggests.
These pre-paid cards can be used as POS terminals as well, and are an effective payment mode to handhold a largely cash-dependent population towards card-less transactions
People moving towards cryptocurrency
In the year winding down, Monark Modi, Founder & CEO, Bitex
opines that a lot more seriousness towards the alternative investment and payment class – cryptocurrency was witnessed.
“This new-age digital currency is being used as a means of payment at several e-commerce merchants. In 2021, we can expect a significant surge in investment banks embracing this ecosystem, payment service providers putting their trust, and even large-scale investors investing in cryptocurrency. In fact, we believe cryptocurrency is going to become the digital gold for millennial investors,” he expects.
According to Prabhat Sahu, Founder & CEO, SAWO Labs, people may start going passwordless in the future to make the payment process as smooth as possible. This trend might come around sooner than later as margins on businesses are steadily reducing - nudging everyone towards moving to a secondary channel of income.
Surge in contactless and quick payments
As per Manish Patel, Founder & CEO, Mswipe, digital payments that are contactless, quick and can be done anywhere and anytime will be the norm for payment players as more SMEs in India will go digital in 2021.
"COVID-19 is unfolding a new story every few weeks and therefore an end-to-end digital infrastructure that supports online commerce in this continued ‘stay at home’ lifestyle will definitely see a fast adoption from small businesses," Patel believes.
Additionally, with the government's continued push on digital payments, such as mandatory FastTAG for every vehicle, Amit Kumar, Founder of GalaxyCard expects that more digital payments adoption will be seen.
Innovations in P2P payments and adoption of open API payments
The last decade has seen innovations in P2P payments, Rajesh Mirjankar, Managing Director & CEO of Infrasoft Technologies says, and the next decade will see the emergence of innovative payment methods for B2B payments.
Large corporates and midsized corporates will adopt open API banking for payments and trade-based collaboration.
Voice commerce and virtual assistance to gain traction
Mirjankar expects virtual commerce and digital payments using virtual assistants to gain traction with requisite security and standardization of authentication and tokenization processes of such payments across PSPs and banks in 2021.
However, with the rise in digital payments, there is also a greater risk of cyber fraud, warns Anand Kumar Bajaj, Founder, MD & CEO, PayNearby.
“There must be a concerted effort to create awareness against sharing passwords and PINs, and consumers must be wary against clicking on suspicious email links or entering sensitive information on unverified websites. Companies must also invest in risk protection software to create firewalls to protect the hacking and prevent cyber fraud,” he suggests.
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First Published: IST