2 PAYMENT METHOD PROFILES: DIGITAL WALLETS
Case Study: India India has emerged as a global leader in digital payments. This can be seen by the displacement of cash by digital payments over the past decade. The share of cash in the POS environment has decreased from 80% in 2014 to 15% in 2024, while the share of digital payments increased from 2% to 62% in the same time frame. 344 In 2024, approximately 130 billion digital transactions worth 200 trillion Indian rupees (or approximately $2.3 trillion USD) took place across India. 345 Bank accounts are the leading wallet funding source with the volume of Unified Payments Interface (UPI)-based payments exceeding 130 billion transactions in 2024. 346 347 This rise in volume is indicative of a significant shift toward a cashless economy and is seemingly driven by the accessibility to UPI and other digital payment options. A few of the most used digital wallets across India include Google Pay, PhonePe, Amazon Pay, Bharat Interface for Money (BHIM), and Paytm, which is one of the most used digital wallets with over 160 million users and over 90 million active monthly transacting users. 348 Some may consider BHIM - a state-owned digital payment app created by the National Payments Corporation of India (NPCI) in 2016 - as a banking app in lieu of a digital wallet, but regardless of classification, BHIM continues to grow in popularity with 487 banks participating, up from 21 in 2016, and 52 million user downloads, up from less than half a million in 2016. 349 Given the prevalence of UPI in digital transactions, it is important to explore the roots and governance of the network as it pertains to underlying digital wallet payment methods. UPI was launched in April 2016 by the NPCI, which had been formed in 2008 by the Reserve Bank of India and the Indian Banks’ Association to “operate retail payments and settlement systems in India.” 350 In 2024, UPI was the underlying funding method for 83% of India’s digital payments, up from 34% in 2019. 351 UPI has enabled security measures including UPI ID, mobile PINs, and biometrics. 352 UPI supports bank payments and the linkage of RuPay credit and debit cards issued by leading banks, such as SBI, HDFC Bank, Axis, Bank, and Punjab National Bank, which can be added to many popular digital wallets, such as Paytm, PhonePe, Google Pay, and Amazon Pay. 353 RuPay has a reciprocity agreement with Discover enabling network access to UPI while cards from other international networks are not yet supported on UPI. 354 NPCI owns and operates the UPI platform and prescribes rules, regulations, guidelines, roles of participants, including liabilities, dispute management, and settlement timing. 355 Additionally, the Reserve Bank of India publishes “Master Directions” ongoing since January 2016, which include consolidated “instructions on rules and regulations framed by the Reserve Bank under various Acts including, banking issues and foreign exchange transactions.” 356
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