Year 2021 has been remarkable, as the digital payments industry crossed multiple milestones. With over 1.16 billion wireless telecom subscriptions, the world’s second-largest internet population, nearly 1.5 billion cards, and many innovative digital payment modes, India is poised to be one of the largest and the fastest-growing digital payments markets in the world.

As per RBI data, INR 2,326.02 crore digital payments were recorded in FY19, which increased to INR 3,400.25 crore in FY20. By FY21, the volume of digital transactions had increased to INR 4,374.45 crore. Data indicates that the sharpest growth of all has been seen by UPI, which accounts for nearly half the volume of digital payments. The numbers also indicate increasing adoption of digital payments owing to growth in various sectors such as telecom, healthcare, IT, retail, automobile and agriculture.

While the shift to digital payments is not new, it has seen a steady rise over the past two years. The Covid-19 pandemic had made many take to digital payments during the lockdown in 2020 resulting in the volumes as well as value of transactions showing a strong growth. Amid Covid-19, India was home to the highest number of real-time online transactions in 2020 ahead of countries such as China and the US. The good part is that the change in payment habits appears to be more permanent as digital payments have continued the same pace of growth in 2021, compared with 2020.

India’s journey of creating a digital financial infrastructure has been characterized by collaboration between the government, the regulator, banks, and fintechs. 2021 saw several productive decisions being made on the regulatory front across various domains such as tokenisation, UPI on feature phones, and offline payments – clearing the path for an exciting time ahead.

We, at Cashfree Payments, also had a great journey in 2021. From an investment perspective, we had India’s largest bank, State Bank of India, investing in our company. We also made our first strategic investment in Telr, enabling us to launch distinctive offerings in the MENA region. We launched ‘Accounts’, a Banking-as-a-service (BaaS) solution, to help neo-banks and fintech platforms integrate banking services into their products. In compliance with the new RBI mandate, we also launched a card-on-file tokenization solution called ‘Token Vault’ to help merchants save tokenized cards in place of actual card details.

As the economy continues to recover from the Covid-19 crisis and consumer behaviour shifts to a less-cash society, the adoption of digital payment modes will continue to touch new highs.

We also foresee the following trends in 2022:

• Mobile devices will continue to be one of the most preferred modes for making digital payments and promoting card tokenization and QR-based solutions

• The boundaries between banks, fintechs and technology players are likely to diminish, and players can utilise suitable opportunities to move up the value chain and expand their revenue pools

• We will see an increasing role of APIs and BaaS-based solutions that will further provide convenience to customers across sectors

• The adoption of digital payments in metro and tier I cities is strong. We should see banks, fintechs and regulators focusing on developing products to attain similar success in semi-urban and rural areas of the country

• We envisage that UPI payments through feature phones will be one of the biggest game changers in 2022. Exploratory activities around digital currencies will provide customers with an alternative to cash