TECHNOLOGY & TRUST: INDIA
How the jewel of Asia is turning up the heat in terms of what’s possible in payments, according to Rüdiger Vogt of G+D and Aveek Chaudhuri If you were seeking a bellwether for the future direction of payments, one country stands out. With 25.5 billion real-time payments logged in 2020, India leads the world by volume, processing 9.8 billion more than second-placed China. For industry watchers, India also offers valuable insights. The country is vast and diverse both geographically and socially and for years its government has used digitisation to modernise and level-up its urban and rural poor. Now that it, like the rest of the world, is looking to rebuild from COVID-19, it has an even more vital role to play. Products are launched in India on a scale unmatched in the West, and, as Rüdiger Vogt, head of payments 4.0 at Giesecke+Devrient (G+D), points out, ‘niches can be extremely large in India, with a population of 1.4 billion’. And 2022 will see some big changes. From January 1, new rules around tokenisation arrive, which Vogt believes will make the technology near-ubiquitous. And Aveek Chaudhuri, a thought leader in digital financial services, says the
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payments space is now evolving so fast ‘it is not always possible for a common person to keep track of it’. But the change we see today has been at least a decade in the making. In the words of India’s prime minister, Narendra Modi: “If there is a strong force that brings a change in the lives of those on the margins, it is technology. It serves as a leveller and a springboard.” A prime example of this is the Aadhaar card, created as a system to deliver social security services to the country, which was launched in 2009 and provides a means of identification enabling individuals to access services such as bank accounts. From there, with smartphone in hand, a person can use the country’s other notable innovation – the Unified Payments Interface (UPI) – to electronically pay a merchant for goods, or exchange money with another individual. The National Payments Corporation of India, which is overseen by the country’s central bank, developed Aadhaar so that it can be used for cashless payments by people with a linked bank account but no smartphone. And, during 2021, the government launched e-RUPI, an
electronic voucher system whereby individuals can securely receive a QR code or SMS to access services such as healthcare or benefit payments. Under Prime Minister Modi, the country launched the Digital India programme in 2015, and the potential smartphones and mobile communications that flow from it provide for leapfrogging older systems. It means people who were recently unbanked can switch from cash under the mattress to mobile wallets overnight. Modi’s infamous demonitisation policy, launched in 2016, provided another shove towards a cashless system by removing 500 and 1,000 rupee notes from circulation at one fell swoop, with the aim of weakening India’s so-called ‘shadow economy’. Though the collateral damage of removing 86 per cent of currency in circulation was enormous – hundreds of thousands of merchants lost their businesses and it knocked off around one per cent off gross domestic product – Indians certainly learned they needed to be ready for alternatives to cash. Then came COVID-19, and the need to transact remotely became as important in India as anywhere else. www.fintechf.com
