Change in Indian Payment System after COVID-19
In 2020, COVID-19 became a threat for most economies. Safety measures had to be taken and a nationwide lockdown was also declared in India. Industries like manufacturing, retail, and all types of businesses were affected.
After demonetisation, many policies were formed to aid and support the growth of digital payments in India. It did accelerate the use of popular methods like mobile wallets and card payments. But, this was further given a push in 2020 due to the pandemic. Adopting contactless payment became a necessity and so the shift happened much more significantly during this time.
Let us understand how COVID-19 made an impact on India’s payment system.
Impact on Businesses
Some sectors saw a decline in digital payments while some witnessed a great boost in digital payments. With COVID-19, digital transactions became necessary and not just a convenient method of payment. Businesses and retailers who adopted digital transactions saw a spike in their business. The online retail industry witnessed huge growth and many businesses that only had a physical existence then switched to having their online store or platform.
Opportunities of Increasing Digital Payments
India has further opportunities that can increase digital payments. The digital transaction has increased by 55% since last year which is a big change! The increasing use of UPI and IMPS has been a huge part of the contribution to the change. Business owners and retailers are now adopting mainly digital methods of transactions for their customer’s convenience.
The New Trends of Payments Methods
The economy adopted new ways of payments such as QR codes, online transactions, mobile wallets, UPI, micro ATM, and AEPS. Before COVID-19, the use of these methods was not as much as it is now. A great shift was seen due to the pandemic and it continues to be growing. One of the leading applications used by retailers is Payworld, it helps them earn commission on every transaction they carry out via the app. Such applications empower small businesses and enable more people to make use of digital payment methods like AEPS, micro ATM, and UPI payments.
Cash Payments Reduced Significantly
As both the business owners and the consumers started moving towards digital payments for all transactions, cash transactions were reduced. It helped businesses understand the convenience of digital and online payment methods. Managing cash was not an easy task, but digital payments have reduced the cost of cash management for retailers.
The shift from cash payments to contactless payments is a trend and a transformation that will now become a part of all industries and sectors. As consumers understand and realise how easy, fast, and convenient the new payment methods are, they will ensure to carry out most of their transactions digitally. And yes, it is undeniably true that COVID-19 has been a major reason for this change in India’s payment system.