ABSTRACT
India’s digital payment ecosystem has evolved conspicuously over the last decade on grounds of the innovation of paperless payment instruments coupled with unprecedented challenges put forth by the demonetization of 500 and 1,000 rupee currency notes and the global pandemic of 2019. This chapter attempts to study the digital transformation of India from a cash-obsessed economy to a cashless one. A review of the last decade of the digital payment (DP) system in India is conducted to explore and analyze the trends in the DP ecosystem from the year 2010 onward. The chapter also postulates a theoretical model of the evolution of the digital payment ecosystem in India and analyzes the comprehensive growth of digital payments by scrutinizing popularly used digital payment indicators such as card payments, National Electronic Fund Transfer System (NEFT), real-time gross settlement system (RTGS), Bharat Interface for money (BHIM), Unified Payments Interface (UPI), and Immediate Payment Service (IMPS). The impact of COVID-19 on India’s digital payment ecosystem is deliberated by reviewing the trends during the pre-COVID-19 and post-COVID-19 era. The study reveals that UPI has surpassed all the other modes and has witnessed a phenomenal growth rate of 103% in transaction volume and 98.87% in transaction value from September 2020 to September 2021. A statistical comparison of pre-COVID-19 (2018-2019) and post-COVID-19 (2019-2020) transaction values unveil a decline of 3.6% and 6.89% in the average annual growth pace of IMPS and UPI. The economic slowdown during the post-COVID-19 phase led to a downfall of 19.5% in RTGS transaction value in FY 2020-21.
