5 Powerful Drivers of Digital Payments in India

Digital payments in India have increased in recent times. From being a society that was disproportionately dependent on cash transactions, many of which were invariably not accounted for, India is gradually growing into a cashless or at least a “less-cash” place.

There have been many powerful drivers of digital payments in India. In this article, we look at 5 of them.

1. Convenience

A major driver of digital payments in India has been convenience. Many Indians saw for themselves the immense convenience that digital payments brought forth for them.

For instance, having the exact amount of money in cash for every purchase is always a challenge, while such precise payments can always be made digitally with ease.

Further, handling a lot of cash by itself proved to be a challenge, especially for high value/high volume stores. Petrol pumps in India, for example, still have to contend with large amounts of cash every single day. The same is the case with jewelry businesses.

Yet, things are changing and many folks across diverse sectors and industries are slowly and steadily making their way towards digital payments in India.

2. Demonetisation

A big shocker for the entire Indian populace was the government’s decision to render 86% of Indian currency notes (by value – 500 and 1,000 Rupee notes) non-legal tender in November 2016.

While many were left high and dry, struggling to cope up with this sudden change, it also brought forth a realisation that it is never really wise to stack up a lot of cash. Instead, it is far more advisable to have money in non-cash forms like bank accounts, investments, tangible assets such as gold or property, and so on.

No doubt, demonetisation proved to be one of the biggest drivers of the shift towards digital payments in India.

3. Jan Dhan Bank Accounts

Yet another thrust from the new Indian government that took over in 2014 was the setup of millions of what are called ‘Jan Dhan’ or ‘People’s Money’ bank accounts.

Suddenly, a large section of society that was previously outside of the entire banking system altogether was brought within its fold. While many of these bank accounts remained (and continue to remain) dormant, there are many more that are in regular use.

Folks have seen for themselves the benefits of having bank accounts and using them for their financial transactions, versus being reliant on cash alone.

4. E-Wallets

The emergence of numerous e-wallets like Paytm, PhonePe, Google Pay, and Amazon Pay has also dramatically changed the digital payments scene in India for the better.

Digital Payments in India
Paytm has emerged as a prominent e-wallet facilitating digital payments in India

In urban India especially, the change is clearly there for one and all to see with many businesses, both big and small, happy to accept payments through these e-wallets.

Again, the convenience factor we alluded to in the first point above has gone on to make a big difference. Instead of having to handle cash all the time, even for small transactions, these e-wallets have proven to be a great blessing.

Further, a lot of these e-wallets offer incentives such as cashback on their usage. Perks like these keep users hooked onto them. Over time, once users clearly see the benefits that these e-wallets have to offer they continue to use them!

5. Mobile Phones Driving Digital Payments in India!

One of the biggest drivers of digital payments in India has been the proliferation of mobile phones, specifically smartphones. From a situation where the majority of people did not have access to basic telephones at all, it is expected that by 2022, smartphone users in India will cross 850 million.

Highly affordable data plans, especially from the likes of Reliance Jio, have been responsible for allowing so many Indians from vast sections of society to access the Internet, without worrying about costs.


A wide array of factors – as noted above, have played a major role in incrementally driving up digital payments in India.

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