Fintech Is Redefining The Future Of Payments In India
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India has traditionally been a cash-driven economy, but recent years have witnessed a significant shift towards digital payments. The exponential rise in digital payments has not only transformed the way financial transactions are done in India, but also fuelled the growth of fintechs. This increase in digital payments adoption is due to two major events. Demonetisation in 2016 served as a catalyst, leading to the proliferation of mobile wallets, payment banks and other innovative payment solutions. Furthermore, the Covid-19 pandemic accelerated the popularity of digital payments, resulting in a surge in adoption and making UPI and digital payments a part of the daily lives of millions.
The combination of expanding digital infrastructure, increasing smartphone and internet penetration, and a growing tech-savvy population has created an ideal environment for fintech companies. According to an industry report, the Indian fintech market is expected to reach $150 billion by 2025. It would be right to say that the Indian fintech industry is set to play a pivotal role in the country's economic growth, driven by favourable government policies, technological advancements and a growing consumer base.
Shift To A Cashless Economy
Digital payments are no longer confined to urban areas, thanks to the government's push for a less-cash economy and the rise of secure and simple-to-use payment platforms like UPI. Additionally, favourable government initiatives such as Digital India have significantly boosted digital payment adoption. Unified Payment Interface (UPI) has led to widespread digital payment use across the country, including smaller towns, cities, and rural areas—thanks to its ease-of-use and convenience.
Today, UPI has become ubiquitous in the payments landscape. In bustling markets across cities or smaller towns, a large number of shops and street vendors now use UPI QR codes to accept payments. The ease and convenience of UPI have encouraged millions to trust digital payments, reducing the reliance on cash. Today, consumers can step out without their wallets and pay for their shopping via UPI.
This transformation wasn't so evident 5-6 years ago. Retailers were hesitant to accept digital payments due to a lack of trust or additional charges. Over the years, more retailers have recognised the benefits of digital payments and joined the digital revolution. Retailers find it convenient to accept digital payments as they don't have to worry about returning the change, in turn ensuring a better customer experience. Also, with sound boxes, merchants can get a quick voice confirmation of the payment received. With digital payments, they are able to keep a better track of their earnings.
Government initiatives like Make in India, Digital India, Start-up India, and Jan Dhan Yojana have enabled the growth of fintechs. Additionally, the Reserve Bank of India has established a regulatory sandbox framework that allows fintech startups to test their products and services in a controlled environment. This is a great initiative in driving innovation.
BharatPe: Enabling Bharat With Disruptive Fintech Products
The Indian fintech ecosystem is witnessing disruption with startups and established players that are reshaping the fintech landscape and driving its growth.
BharatPe was launched with the objective of empowering millions of offline retailers with best-in-class fintech products that can enable the growth of their businesses. In the founding year itself, it became the first to launch an interoperable UPI QR code with zero transaction fees, with the objective of universalising digital payments. Today, BharatPe enables UPI payment acceptance from over 150 apps across over 1.3 crore offline merchants in 450+ cities across India. In the year 2020, BharatPe also forayed into the POS category with the launch of BharatPe Swipe, with the objective of enabling merchants to accept payments via a range of debit and credit cards. Launched in the middle of Covid, this was India’s first zero-rental POS offering. BharatPe Swipe’s competitive pricing ensured that it reached offline merchants who had never used a POS machine before. The company followed this with the launch of Android POS in 2023.
BharatPe Speaker has emerged as another disruptive launch with sound boxes now cementing their place on the cash counters of millions of offline retail stores. The convenience of accepting payments via QR, combined with the enhanced customer experience due to instant voice confirmations of payments received have fuelled the growth of this category.
With the objective of taking the payments experience to the next level, BharatPe recently launched BharatPe One—India’s first all-in-one payment product that integrates POS machine, QR code and speaker into one device. This fintech solution is integrated with a high-definition touchscreen display, 4G and Wi-Fi connectivity, and is powered by the latest Android operating system. With user-friendly interface, portable design and comprehensive transaction dashboards, the product is designed to deliver enhanced performance and security while catering to the needs of offline merchants. The company has launched the product in about 100 cities in the first phase and will expand it across 450 cities in the next six months.
Over the years, fintechs have launched a host of new-age products across investments, credit access, payments, etc., which have been adopted by millions and have transformed the way financial transactions are done. These innovations by fintech companies are constantly helping the ecosystem to evolve and improve, with benefits passed onto consumers, merchants and other stakeholders.
We have covered a lot of ground with regards to the adoption of new-age fintech products across the country. However, a large number of India’s population is still underserved and unbanked, which presents a huge market opportunity for fintech companies to provide innovative solutions that can cater to the needs of this untapped segment.
Fintechs are also exploring collaborations with NBFCs and traditional financial services companies to offer disruptive products to a wider range of consumers.
Technology Driving The Fintech Revolution
India's robust technology infrastructure and a large pool of skilled professionals in technology provide an environment conducive to fintech growth. Technological advancements such as artificial intelligence, machine learning, blockchain and data analytics have also been instrumental in driving fintech innovation.
AI and ML algorithms aid the development of sophisticated fraud detection systems, improvement in customer experience and automation of financial processes. Also, blockchain offers a decentralised, secure way to record and verify transactions, enhancing efficiency and transparency in financial services. It enables faster, more efficient transactions, reducing the need for intermediaries and the risk of errors and fraud.
Fintech platforms leverage technology to make financial services more convenient, accessible and efficient. The introduction of chatbots has revolutionised customer service, offering timely support and actionable insights into consumer behavior, preferences and experiences.
Future Outlook
The future holds tremendous promise for the Indian fintech industry. As banks and financial institutions focus a lot more on embracing digital transformation, collaborations between traditional institutions and fintech startups are expected to become more common.
With favourable government policies, technological advancements and a large unbanked and underserved population leaning towards mobile-first digital solutions, Indian fintech companies have a unique opportunity to redefine the financial services landscape.
