{"id":35873,"date":"2023-06-11T07:48:09","date_gmt":"2023-06-11T02:18:09","guid":{"rendered":"https:\/\/vajiramandravi.com\/current-affairs\/?p=35873"},"modified":"2025-04-21T12:59:59","modified_gmt":"2025-04-21T07:29:59","slug":"towards-a-cashless-economy-india-dominating-digital-payment-landscape","status":"publish","type":"post","link":"https:\/\/vajiramandravi.com\/current-affairs\/towards-a-cashless-economy-india-dominating-digital-payment-landscape\/","title":{"rendered":"Towards a cashless economy: India dominating digital payment landscape"},"content":{"rendered":"<h3><strong>What\u2019s in today\u2019s article?<\/strong><\/h3>\n<ul>\n<li><strong>Why in News?<\/strong><\/li>\n<li><strong>India\u2019s Move Towards a Cashless Economy<\/strong><\/li>\n<li><strong>Latest Developments in India\u2019s Digital Payment Landscape<\/strong><\/li>\n<li><strong>Challenges to India\u2019s Digital Payment Landscape<\/strong><\/li>\n<li><strong>Way Ahead<\/strong><\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<h2><strong>Why in News?<\/strong><\/h2>\n<ul>\n<li>According to government data, India with <strong>89.5 million digital transactions<\/strong> (46% of the global real-time payments) in the year 2022 has topped the list of 5 countries (followed by Brazil, China, Thailand and S. Korea) in digital payments.<\/li>\n<\/ul>\n<p><strong>\u00a0<\/strong><\/p>\n<h2><strong>India\u2019s Move Towards a Cashless Economy:<\/strong><\/h2>\n<p><img decoding=\"async\" src=\"https:\/\/lh6.googleusercontent.com\/atGu3SDQ04b6q2Pc4FrzIKBrbx1zNrr30p0ayYMrEBrt5F9qVZc1dImt-3WVQSpJnZrtFA3ZOAmdzD85DYDFvP2l3e8dmobXMzyOs2_D4-woJ4m8xukW8SUon9HWVg9OK1BDXgbITj2JgxHlY-bzi1o\" alt=\"\" \/><\/p>\n<ul>\n<li><strong>Cashless economy<\/strong> refers to the economy where transactions are done using digital payment methods instead of using cash.<\/li>\n<li>India\u2019s move towards a cashless economy <strong>started nearly 3 decades ago with the introduction of online banking<\/strong>.<\/li>\n<li>However, the digital payments ecosystem received its first real boost when the Reserve Bank of India (RBI) set up the<strong> National Payments Corporation of India (NPCI) in 2008.<\/strong>\n<ul>\n<li>It was launched <strong>to shape the payments infrastructure and enable innovations<\/strong>.<\/li>\n<\/ul>\n<\/li>\n<li>This led to the launch of <strong>Immediate Payment Service (IMPS)<\/strong> in 2010 followed by the RuPay payment network, <strong>Aadhar Enabled Payment System<\/strong> (AEPS), Bharat QR, etc.<\/li>\n<li><strong>The 2016 launch of the Unified Payment Interface (UPI)<\/strong>, that enabled instant real-time payment based on a unique handle linked to a mobile number, can be considered the <strong>spark that ignited this journey<\/strong>.<\/li>\n<li>Since then, the volume of digital payments in India has <strong>grown by 50% annually <\/strong>to $1.5 trillion digital payment transactions as of December 2022.<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<h2><strong>Latest Developments in India\u2019s Digital Payment Landscape:<\/strong><\/h2>\n<ul>\n<li>The NPCI is now enabling <strong>non-resident Indians (NRIs) <\/strong>to leverage UPI in countries such as Saudi Arabia, Singapore, Canada, Hong Kong, Qatar, the USA, etc.<\/li>\n<li>The Indian government is expanding UPI, RuPay, and the BHIM app\u2019s functionality in several countries <strong>to simplify cross border payment processing and strengthen interoperability.<\/strong><\/li>\n<li>The RBI has also recently launched the <strong>digital rupee (e\u20b9)<\/strong>, India\u2019s <strong>central bank digital currency (CBDC)<\/strong>, categorised as a legal tender in digital form.<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<h2><strong>Challenges to India\u2019s Digital Payment Landscape:<\/strong><\/h2>\n<ul>\n<li><strong>Lack of adequate infrastructure: <\/strong>In the current scenario, digital payment systems are heavily reliant on smartphones that are enabled with <strong>data connections, NFC, bluetooth<\/strong>, etc.\n<ul>\n<li>Out of India\u2019s 800 Mn mobile phone users, <strong>only 200 Mn use smartphones<\/strong>. Of these, only 6 Mn are NFC-enabled.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Reach of digital penetration to end mile of customers:<\/strong> There is a<strong> digital divide <\/strong>between rural and urban India.<\/li>\n<li><strong>Prone of fraudulent transactions and cyber-attacks<\/strong>, rise of transactional failures, etc.<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<h2><strong>Way Ahead:<\/strong><\/h2>\n<ul>\n<li><strong>The RBI\u2019s Payments Vision 2025 document: <\/strong>It highlights <strong>5Is <\/strong>&#8211; integrity, inclusion, innovation, institutionalisation and internationalisation &#8211; for digital payment landscape.<\/li>\n<li><strong>Digital education:<\/strong> To make citizens aware of fraudulent practices that they can come across while making digital payments.<\/li>\n<li><strong>Use of technology:<\/strong> Developing a framework for an<strong> internet of things (IoT)<\/strong>-based payments systems that would enable customers to pay via connected devices apart from users\u2019 phones and tablets.<\/li>\n<li><strong>Reviewing legal-institutional infrastructure: <\/strong>The RBI will also undertake a comprehensive review of the Payment and Settlement Systems (PSS) Act 2007, to bring it in line with India\u2019s digital payment landscape.<\/li>\n<li><strong>Innovation and robust regulatory framework:<\/strong> Like the new Digital Personal Data Protection Bill, Digital India Bill to drive growth and cutting-edge innovation for digital payments, not just in the country but globally.<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<hr \/>\n<h3><strong>Q1) What is Near Field Communication (NFC)?<\/strong><\/h3>\n<p>NFC is a set of communication protocols that enables communication between two electronic devices over a distance of 4 cm (1.57 in) or less. NFC offers a low-speed connection through a simple setup that can be used to bootstrap more capable wireless connections.<\/p>\n<p>&nbsp;<\/p>\n<h3><strong>Q2) How does the unified payment interface (UPI) work?<\/strong><\/h3>\n<p>The UPI is a technology that combines multiple banking services, smooth fund routing, and merchant payments into a single mobile app that can be used by any bank that participates. It also works with &#8220;Peer-to-Peer&#8221; requests, which can be scheduled and paid for based on need and convenience.<\/p>\n<p>&nbsp;<\/p>\n<hr \/>\n<p><strong>Source:<\/strong>\u00a0<a href=\"https:\/\/timesofindia.indiatimes.com\/india\/india-dominating-digital-payment-landscape-leading-the-way-towards-a-cashless-economy-centre\/articleshow\/100891543.cms?from=mdr\" target=\"_blank\" rel=\"nofollow noopener\"><u>India dominating digital payment landscape, leading the way towards a cashless economy: Centre<\/u><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Cashless economy refers to the economy where transactions are done using digital payment methods instead of using cash<\/p>\n","protected":false},"author":5,"featured_media":35874,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[18],"tags":[],"class_list":{"0":"post-35873","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-upsc-mains-current-affairs","8":"no-featured-image-padding"},"acf":[],"_links":{"self":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/35873","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/comments?post=35873"}],"version-history":[{"count":0,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/35873\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media\/35874"}],"wp:attachment":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media?parent=35873"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/categories?post=35873"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/tags?post=35873"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}