India is the second most populous nation on our planet with more than 1.3 billion inhabitants. Currently the number of non-cash transactions per person in India stands at less than 10 per year. To put this in perspective, the number of non-cash transactions per inhabitant in the United States was 391 in 2013.
Broadly speaking, there are two reasons that explain the challenges that have limited the adoption of e-payments in India. First, nearly 75 million households have no existing relationship with a financial institution. Second, only about 10 percent of the entire retail ecosystem in India have access to the card payment processing infrastructure.
To address these challenges, the Government of India has taken a number of steps. With initiatives such as Direct Benefits Transfer (DBT) and Jan Dhan Yojana (JDY), the number of households having bank accounts has increased.
In addition, the government has supported options designed to put India at the forefront of digital innovations. For example, the implementation of the Aadhaar program made India the only country in the world to offer secure, convenient biometric authentication for use in payments.
Lastly another factor that has helped accelerate financial inclusion and the introduction of e-payments has been the steady increase in the number of smartphone users in India. Today, more than 150 million people use smartphones and over 900 million individuals own mobile phones. Over the next five years, the number of smartphone users is expected to grow to 500 million.
In order to build on these initiatives, the National Payments Corporation of India (NPCI) commissioned the creation of a digital payments platform. The project provided a Unified Payments Interface that exposes a set of standard APIs that provide a payments infrastructure which is completely independent of the card networks. It allows banks and other players to innovate and offer a superior customer experience to propel easy, instant payments via a mobile app, the web and other applications.