The case of India’s transformation from being mostly cash dependent for daily payment transactions to the real-time payment system that encourages and facilitates digital payments

ABSTRACT

The global business of trading in goods and services has been in existence for a very long time and so has the need for a system to ensure that the associated payments and settlements are handled effectively. The primary requirement of a good payments system has always been reliability, security, efficiency, affordability and accessibility. A recent development in the payments system eco-system has been the transition from the physical mode of payments to the real-time version. This development was enabled by the creation of a platform that facilitates the transfer of funds on-the-spot, which in turn has the potential to radically improve each of the above-mentioned primary requirements of a good payments system. The new platform also creates the opportunity for governments to stimulate the critical parameters of governance that include transparency, responsiveness, effectiveness and inclusion. In such an environment, where vision, creativity, aggression and competition are the drivers for development, financial markets need to play a pivotal role in steering the evolution and growth of real-time payment systems. Competition in the industry will be driven by how well the potential of real-time payment systems is exploited in terms of finding solutions for radically improving the capacity, efficiency and effectiveness of the system. Such a situation demands that the transformation of the traditional payments systems to real-time should be a critical agenda item on the strategic plan of the stakeholders. This Paper presents India’s pioneering journey on the transformation of its payment systems from the traditional manual version to the game-changer real-time mode. The Paper further validates this ingeniously designed framework by providing real-time conclusive evidence using the success metrics of the system. The innovative country specific solution presented here is in alignment with one of the tracks of this conference titled ‘Digital transformation and innovation in the Public Sector’.

(Full paper is available at https://www.acm.org/ )