India has the more evolved digital payment system amongst developed countries such as UK, China, and Japan, as per US-based banking technology provider – FIS. The report titled Flavors of Fast used the Faster Payments Innovation Index (FPII) created in 2014
The report titled ‘Flavors of Fast’ (link) used the Faster Payments Innovation Index (FPII) started in 2014. Its aim was to create a comparative rating system where diverse payment schemes from around the globe could be easily compared and contrasted.
According to FIS, the FPII ranks various payments systems on a scale of 1-5. Level 1 and 2 reflect fast payments, level 3 denotes highly desirable features while 4 and 5 stand for optional features maximising customer value such as remittance information, fast settlement, batch and individual payments and push and pull payment capability.
India is at level 5 on FPII ranks.
Importantly, Immediate Payment Service (IMPS) from India was the only system across the world performing at level 5. It’s an instant interbank electronic fund transfer service through mobile phones.
The report notes that with as much as 40 percent of India’s total population being unbanked, providing universal access to basic payment services is a critical function for the future health of the banking industry.
“India has made great steps by offering innovative solutions on top of IMPS with the use of the Unified Payments Interface (UPI). It’s marketed as a new payment method, but in fact it is a combination of real-time payments with open interfaces and is intended to replace cash, POS and wallets. This combination of open and instant payment capability has seen the service rocket in usage beyond simple P2P payments,” notes report.
UPI transactions (Unified Payments Interface) saw an increase of about 37 per cent in total transaction volume in November 2017 with 105 million transactions.
The value of transactions rose about 37% to Rs 9,679 crore in November from Rs 7,057 crore in the previous month.
Currently, there are 61 banks live on UPI platform, however, a major portion of transactions is being driven by smartphone-based payment applications such as Google’s Tez, Flipkart-owned PhonePe and Bharat Interface for Money (BHIM).
The report was first published in Mint.