India has one of the fastest-growing economies and the third-largest consumer market in the world. Rising salaries and rapid internet penetration are two effects of the economy’s quick expansion. Digital payment innovations like the United Payment Interface (UPI) and Rupay have further contributed to the growth of digital payments.
India’s UPI system handled 7.82 billion transactions valued at Rs 12.82 trillion (US$ 154.9 billion) as of December 2022 according to industry sources. The new financial provisions for digital payments in 2023, which are intended to strengthen the ecosystem for digital payments, support this. The effort to connect UPI with the RuPay credit card was recently disclosed by RBI. With the introduction of 5G, access to the internet and the Internet of Things will both experience significant growth, which will also open up new possibilities for digital payments and its acceptance.
Through a number of initiatives, including tax exemptions, price controls on digital payments, and incentives for retail purchases the government has actively promoted digital payments over the years. It set up Rs.1,500 crores just last year to encourage and promote digital payments. The National Electronic Toll Collecting system, which is supported by the government’s requirement that all passenger-carrying four-wheelers utilize FASTag, has made contactless hassle-free electronic toll collection widely adopted.
India’s ecommerce industry is a result of growing internet use, rising earnings, and a thriving digital payments infrastructure. In recent years, the country’s ecommerce market has seen substantial growth. This industry in India has been dominated by a small number of large businesses. That’s why there is an increase in investments to improve and increase the adoption of Open Network for Digital Commerce (ONDC) which will integrate Indian retailers into the digital ecosystem.
The Indian ecommerce sector considers ONDC to be the next UPI. Democratising and promoting an open network for all facets of the trade of goods and services is the primary goal of ONDC. With open standards and open network protocols that are independent of the platform, ONDC is built to be open-source. The foundations of ONDC are open protocols that cover every aspect of the entire chain of activities in the exchange of goods and services. They are comparable to a unified payment interface for payments, a simple mail transfer protocol for email exchange, and a hypertext transfer protocol for information exchange over the internet.
As per industry sources, the ONDC network is anticipated to grow to 12 lakh merchants, 90 crore buyers, and 730 crores in extra yearly sales over the course of the next five years. A further gross merchandising value of Rs. 3.75 lakh crore (US$ 45.42 billion) can be produced by ONDC for the ecommerce sector, as per industry sources. This will accelerate the expansion of ecommerce in India.
The promotion of well-known digital payment systems, RuPay Debit Cards, and low-value BHIM-UPI person-to-merchant (P2M) transactions in the current fiscal year would be supported by an Rs.2,600 crore incentive program, which was agreed by the Union Cabinet on Wednesday. Due to ongoing government incentives, total digital payment transactions have increased annually by 59%, from Rs.5,554 crore in 2020–21 to Rs.8,840 crore in 2021–22, according to a statement from an official source. “BHIM-UPI transactions have increased by 106% year over year, from 2,233 crores in FY2020-21 to 4,597 crores in FY2021-22, according to the data.
The ONDC will accelerate the growth of the Indian ecommerce industry, converting it from a platform-centric to an open marketplace. Small and medium-sized enterprises in India will be made more discoverable thanks to ONDC, which would also encourage indigenous industries to enter the digital market. India’s digital economy would advance if ONDC agreed with UPI, the country’s digital payment reform. Prime Minister, Narendra Modi, predicts that India’s digital industry would generate $1 trillion in revenue by 2025. India’s digital commerce would undergo a paradigm change and be fundamentally revolutionized by ONDC.
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