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The Economist Intelligence Unit conducted a 73-country survey earlier this year. It tracked the government’s adoption of electronic transactions and the underlying ecosystems that support digital payments. India ranked 28th, up from the 36th position in 2011. 

The fact that Indians are comfortable making C2G (citizen-to-government) payments online—which were traditionally made in cash—shows how far we have come in our quest for a truly Digital India. Not just transaction volumes—behaviours and hard set notions about digital payments have changed post demonetisation. The year 2018 saw a lot of these changes, and I am certain the next year will bring more. Let’s quickly rewind before we fast forward to the next year.

The year that was 

The Supreme Court’s verdict of striking down Section 57 of the Aadhaar Act ensured that private companies cannot mandate customers to provide Aadhaar for on-boarding; they must provide alternate ways such as passports, voter’s ID or driver’s licence. The judgment had some ramifications for the industry. It has increased the cost of doing business. Earlier an e-KYC verification and on-boarding took 2-3 days and cost 15 per person; physical verifications cost up to 80-100 per person and take a much longer time. 

The verdict also affects the subscription industry and recurring payments. Consumers could use Aadhaar to approve e-Mandates and e-NACH debits on their accounts. Now companies can only use Netbanking for obtaining online permission for recurring payments. Or, it’s back to paperwork and tediousness. 

But all was not grey and dark. UPI is gaining significant momentum and the launch of UPI 2.0 was a much-awaited event. From being a P2P payment mode, UPI has transformed to a merchant-first platform with overdraft facilities, the features to add invoices, and more. From 30 million UPI transactions in September 2017 to 405 million in November 2018, UPI will become the de-facto method for all online payments by 2020. For all you know, the UPI handle may soon be used as a credit card. 

What we can expect in 2019 

UPI will steal the show: We have only scratched the surface of UPI’s relevance for businesses and with features such as higher transaction limit and more secure QR-based payments, UPI will not only drive larger transaction volumes but also significantly increase P2M adoption. From contributing 2% of the total GMV (gross merchandise value) on our platform in January 2018, UPI grew to 12% in November, whereas the GMV share of cards fell from 74% to 55% in the same period. 

Clean sweep by WhatsApp: With its 200 million Indian users, WhatsApp is another disruptor we must watch out for. The launch of UPI payments on WhatsApp would take UPI mainstream, enabling a huge chunk of the Indian public, down to the smallest cities, to have access to digital payments on a trusted platform. This could be a watershed moment for the payments industry; like the Jio launch was for the internet industry. 

Internet population will be directly proportional to financial inclusion: Talking of Jio, it will empower more consumers, increasing financial inclusion, and bring more people online. As the average Indian’s disposable income increases, we see them spending more online. However, the Indian millennial is also concerned about wealth management and investments. According to a Credit Suisse report, the likelihood of Indian households investing in stocks and mutual funds has risen from about 13% in 2010 to 19% in 2017. This will continue to increase; it will be interesting to watch how the mutual funds industry will get revolutionised next year. 

Subscription platforms will grow: We can also expect growth in loyalty programs and subscription platforms. The Zomato Golds and Swiggy Supers will continue to entice more consumers as they offer tailor-made solutions for day-to-day issues. 

But it’s not going to be all roses and rainbows: It is going to be thrilling to watch how RBI regulation will impact the roll-out of policies and how other payment modes will catch up on their offerings to consumers. Also, because of the 2019 general elections, chances are investors may become cautious on funding start-ups; they will want to understand the political landscape before committing money. Businesses, especially mutual fund companies, will have to look for alternatives to Aadhaar-based digital KYC to ensure that work moves at the same pace as before and consumer experience is not compromised. 

All in all, while we can expect important changes and a watershed moment or two, I believe all these improvements will be channelled towards fuelling digital payments into the mainstream—paving the way for digital inclusion and financial stability.

Harshil Mathur is CEO and co-founder, Razorpay

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