Electronic Payments in India

India has been rapidly transforming in the way it pays. The payment system in India has seen unprecedented growth in electronic payments (over 60%) in the last three years, according to a report by Celent. The research firm predicts that the retail electronic payments market is likely to grow nearly 70% in the next two years and the value of retail electronic payments is estimated to reach US$150bn to US$180bn by 2010.

Trends in Indian Retail Electronic Payments Systems clearly indicate that the Indian market is increasingly gravitating towards electronic payments whenever and wherever available. (Source – RBI Monthly Bulletins; http://www.rbi.org.in/scripts/BS_ViewBulletin.aspx?Id=11223)

Further, the Reserve Bank of India (RBI) has aided the transformation in payments by influencing legislation, such as the Payments and Settlement System Act, and has initiated various programs to encourage electronic payments.   This includes high-value payments through real-time gross settlement (RTGS), payments made via Electronic Clearing System (ECS debit and credit), nation-wide bank transfers through National Electronic Funds Transfer (NEFT), and payments processed by the National Payments Corporation of India (NPCI).

Over the coming weeks, I plan to introduce you to each of these payment methods that are rapidly gaining traction in India.

Subsequently, we will travel across various geographies to understand local payment methods, with a special emphasis on regulated clearing house payments or ACH equivalents.