Digital Banking and the UPI Revolution in India

Abstract

This paper traces the roadmap of digital banking in India, with a focus on the use of unified payments interface (UPI). It brings out that policy changes, infrastructural advancements, widespread use of inexpensive smartphones and the move to app-based services have replaced the local-branch banking with a scenario where there is high reliance on computers and mobile connectivity. Mobile and internet banking, smart cards, prepaid instruments (PPIs) and IMPS (immediate payment service) have been predominant in driving the growth of UPI. The challenges are manifested in its unequal access, especially in the rural areas; the digital divide; cybersecurity concerns; consumer protection and complaint resolution. The paper also highlights that the adoption of digital currency appears to be slow as compared to UPI due to issues related to trust, awareness and operationality. This kind of comprehensive and sustainable development can only be achieved with clear policy framework, tackling of the security related issues, and substantial capacity building.