India’s Digital Payments Re-Revolution
Government‘s bid to get private companies to develop UPI-like technologies
On 8 November 2016, Indian PM Narendra Modi made an unscheduled television address to announce the demonetization of ₹500 and ₹1000 banknotes.
There were prolonged cash shortages across the country and many people were left stranded in long queues outside banks trying to exchange invalid notes. India’s stock market, industrial output, employment rate, and GDP growth rate fell. Despite all this, the government still wasn’t able to achieve its mission— crackdown on black money — as nearly 99 percent of the demonetized currency was deposited back into the banking system.
But there was a silver lining. Amidst all this chaos, India’s digital payments revolution was born.
The first digital payments revolution
Debit cards and credit cards started picking up around 2016 in India, but their use was concentrated in big cities. Demonetization, coupled with the rapid growth in internet access in rural areas thanks to the Jio revolution in the same year, changed this.
According to PwC, the digital payment market has grown at a CAGR of 23 percent in value and 21 percent in volume over the last four years.
