India is embracing the mode of digital payment at a rapid pace. After the demonetization wave took over, a majority of customers and vendors were forced to opt digital payment methods. What started as forced adoption has become a pleasant necessity now. Let’s take a look at some of the trends that are shaping this digital revolution.
Trust in the digital transaction is critical but also under threat
With the increasing rise of malware attacks on the banking and finance sector, Indian consumers are concerned with the risk of payment card fraud. Online and mobile phone purchases were perceived to be the least secure channel and the banking channel is perceived by consumers to be the most secure for financial data. Digital trust emerges to establish and manage trust across myriad digital interactions. Blockchain technology is touted to be the one that can be used to keep a secure record of a person’s identity. It can provide a tamper-proof history of transactions that can allow users to choose who can access their personal data. More than 47% of Indian financial institutions see this as a key use-case for Blockchain as per PWC’s Fintech Trends Report.
New technologies are radically altering both payment processes and business models
Impacting cross-border payments, securities and digital currency issuance, blockchain technology has started to alter the landscape of digital payments in India. Financial institutions in India are launching a proof of concepts for blockchain technology, targeting use cases such as cross-border remittances, trade finance and vendor financing. ICICI Bank executed India’s first international trade transaction and overseas remittance using blockchain in October 2016. A startup called Primechain Technologies has created a Bankchain for banks which gives access to a sandbox, allowing bank developers to discover and develop new blockchain solutions.
It is safe to say the future of payments in India will see continued growth in alternative options. It can also be concluded that mobile will become the primary interaction channel in the future. However, with the increasing digital mode of payments, the opportunity for real-time fraud will also increase.