NEW DELHI: India's digital payments market is set to touch USD 1 trillion within a few years and there is a need for relook at Payment and Settlement Systems Act as technology is changing at a very fast pace, Principal Adviser to Niti Aayog Ratan P Watal said today.
"There has been growth momentum in volume and value terms in digital payments after demonetisation. Whether you see RBI or MEITY data, its much better than it was prior to 2016," he said at an event organised by industry body Ficci.
The digital payments market In India is expected to grow to USD 1 trillion by 2023 led by growth in mobile payments, presenting huge business opportunities for players in the digital space, he said at the launch of Niti Aayog report -- 'Digital Payments - Trends, Issues and Opportunities.'
"Mobile payments are slated to rise from USD 10 billion in 2017-18 to USD 190 billion by 2023," he added.
Watal said however that only in 15 states, higher volume payments are digitised. He further said that the Goods and Services Tax (GST) regime, rolled out in July last year, will have huge impact on digital payments as it matures.
"There are technological changes happening around, so you have to also start looking legislations (Payment and Settlement Systems Act)," he said "The regulation should be such that it should allow new technology to come in very quickly. Technology also changes at a very faster pace than legislation," he added.
Prime Minister Narendra Modi on November 8,2016 had announced demonetisation of Rs 1,000 and Rs 500 notes in a bid to crack down on black money, fake currency and corruption, with focus on pushing digital payments in a 'less cash' economy.
According to Watal, the growth in total retail payments in value terms has seen a three-fold increase in 2017-18 than the trend rate of the last five years -- 2011-16.
"The Unified Payments Service (UPI) and Immediate Payment Service (IMPS) segments in terms of volume registered a spectacular growth during 2017-18. UPI, despite being a new product in the payment segment, has shown a great adoption rate among consumers and merchants," he noted.
The report pointed out that volume of overall payments steadily increased from 2011-12 to 2015-16, recording a compound average annual growth rate (CAGR) of over 28.4 per cent.
"The volume of overall payments accelerated by over 56 per cent in 2016-17. However, rate of growth in volume was of the order of 44.6 per cent in 2017-18.
"Notwithstanding this it is noteworthy that the growth in 2017-18 is much higher than the trend growth rate over the last five years (2011-2016)," the report said.