From Wallets and UPI to Blockchain, How Digital Payments are Evolving in India

From Wallets and UPI to Blockchain, How Digital Payments are Evolving in India


  • The government has played a key role in the digitisation of cash in India
  • Digital payments went down in February but are rising again
  • Upcoming payments firms will have to expand reach via new channels

Most accounts of successful digitisation feature technology providers or tech-hungry consumers in the lead role. But in the story of digital payments in India, it is the government that is the unlikely hero.

In his budget speech this year, Finance Minister Arun Jaitley set the nation a target of 25 billion digital transactions for 2017-18. And enabling this, we have the creation of a new category of financial institutions, namely the Payments Banks. Telecom/ e-commerce companies have turned into payments banks, and are processing huge numbers of low-value transactions via digital wallets and other electronic prepaid instruments for their subscribers and customers, many of whom never had the benefit of formal financial services.

ALSO SEECash Is Culture in India, but It’s Not Going to Be the Future

In August 2014, India’s financial inclusion agenda got a huge boost with the launch of the “Pradhan Mantri Jan Dhan Yojana”, devised to provide every Indian easy access to basic banking services. In just over two and a half years, the Jan Dhan Yojana has garnered a record breaking 282.3 million “no-frills” bank accounts and deposits worth Rs. 640 billion. From here, the next step is to enable these accounts to make and receive digital payments. Aadhaar, India’s unique identification program, is the perfect platform for that because it links to bank accounts to enable both Direct Benefit Transfer (of government payouts) and a host of simple financial transactions via the Aadhaar Enabled Payment System.

aadhaar card reuters 548

Another government initiative that ended up promoting digital payments, even though that was not its primary intent, was the overnight demonetisation of Rs. 500 and Rs. 1,000 currency notes in November 2016. With about 86 percent of cash instantly going out of circulation, consumers from all segments, and even tiny, unorganised businesses were forced into digital transactions, shooting that number from 672 million in November 2016, to 958 million just a month later. Even after the new notes flowed into the system and digital transactions dipped considerably, they remained at higher than pre-demonetisation levels at 763 million in February 2017, and were at 844.7 million in June 2017, as per the RBI.

But arguably, the government’s crowning achievement is the Unified Payments Interface, which has transformed the fragmented mobile payments landscape with an environment where money can move from any bank or financial provider to any other, instantly, cheaply, securely and transparently.

The path ahead
Although the average Indian consumer is way more financially empowered today than a few years ago, as a nation, India still has a long way to go. Getting the one billion plus largely feature phone subscribers to use their device for simple financial transactions is one thing, educating them into financially responsible, informed consumers, quite another. Although India’s payments infrastructure is looking solid, there is a need for a massive effort to build awareness about basic financial management as well as safe financial practices to protect customers from fraud. The fact that India is deemed a favourite target for cyber-attack underlines the seriousness of the problem.

Viability is a big challenge for India’s niche digital payment providers, who are pouring large sums of money into acquiring customers and keeping them happy. At present, almost all digital payment services are being offered free of cost or with attractive incentives – for instance Paytm Payments Bankcharges no fees on any online transaction, while Airtel Payments Bank offers free talktime. Once the honeymoon is over, providers will certainly look at charging these services, which might put the brakes on growth.


One way to keep costs (and hence fees and charges) down is to leverage Blockchain and other open source technologies to facilitate digital payment transactions. Actually, Blockchain fells several challenges in one go – it collapses transaction time and cost, improves transparency, and provides virtually impenetrable security. It can also scale up to meet India’s requirements with ease.

The last point is crucial because it is also the key to viability. Niche payment providers will need to extend their services down to the very last mile and feature phone to sustain the business; banks, although under less pressure, should also look at expanding reach via mobile and other channels, such as micro ATMs and business correspondent agents carrying handheld devices for delivering digital payments to the doorstep.


Samsung Pay comes to Gear S3, use your Samsung smartwatch to make payments

Samsung Pay comes to Gear S3, use your Samsung smartwatch to make payments

Samsung has today made it possible to use the Gear S3 smartwatch with Samsung Pay, the company’s alternative contactless payment method to Android Pay and Apple Pay, in the UK.

  • What is Samsung Pay, how does it work and what banks are supported?

With Samsung Pay enabled on a Gear S3, it can be used to make payments on all contactless payment terminals, including Oyster terminals across the London travel network.

To enable Samsung Pay on the Gear S3, follow these simple steps:

  • Make sure your mobile device is compatible. The Gear S3 can be used with select Samsung phones, and all other Android smartphones running Android 4.4 KitKat or higher
  • Ensure you have the latest version of the Samsung Pay app installed on your mobile device
  • Register your credit or debit card and authenticate your ID
  • Set-up a security pin

To use the Gear S3 to make a payment, hold the watch with the face facing the payment terminal.

  • Samsung Pay now available in UK for Galaxy smartphone users
  • If you use Samsung Pay, you can check-out with Paypal now

Samsung Pay is already available to use with select Galaxysmartphones, but this marks the first time it can be used with one of Samsung’s smartwatches. Samsung hasn’t said if and when it will make it possible to use Samsung Pay with the Gear S2 or Gear S2Classic watches.


Google ends Hands Free mobile payments pilot, iOS app will stop working Feb. 8

Introduced in March for iOS and Android, Hands Free aimed to simplify the payment process for its users by allowing for confirmation of identity to be performed by the cashier. In theory, this allows for customers to conduct transactions with their payment cards and mobile phones safely stowed away in pockets or bags, leaving their hands free to carry their purchases and other items.

Hands Free used a combination of Wi-Fi, Bluetooth, and location services to determine what store the smartphone owner is inside, and if it was a retailer participating in the program. At the point of payment, customers would advise they planned to “pay with Google,” with the cashier able to check the user’s identity using a photograph on the payment terminal’s display.

A notice on the project’s website revealed it will be shutting down next week, with users unable to make payments using the mobile apps from Feb. 8. Stores in the San Francisco Bay Area participating in the scheme will also find the payment system will be unavailable from the same date.

Google advises it will be working to “bring the best of the Hands Free technology to even more people and stores” following the app’s closure. While Google “can’t share any more details” about where the project is headed, it is likely some of the technology involved in its creation could be rolled into Android Pay, the company’s own NFC-based mobile payments platform and main competition to Apple Pay.

Alternative forms of mobile-based payments are also being trialled by other tech companies, looking to offer customers a streamlined shopping experience. In December, Amazon revealed it’s first ever grocery store called “Amazon Go,” which relied on customers checking in to the store with an app before being able to collect any shopping they want and leaving, with their Amazon account automatically billed based on what was taken.

For the moment, consumers are still enjoying the use of Apple Pay, with the number of transactions up 500 percent year-on-year, according to Apple’s recent quarterly financial results. The high usage helped boost the “Services” segment of Apple’s business to $7.17 billion for the quarter.

Apple iMessage Update Lets You Send Payments, Edit Photos, More

Apple iMessage Update Lets You Send Payments, Edit Photos, More

Until very recently, the thought of Apple (NASDAQ:AAPL) ever opening its applications like other companies for developers with APIs and SDKs wasn’t even contemplated. The company is notoriously protective of its platform, so when it announced third party developers would have access to several of its applications, including Messages, which is the company’s most used app, at the Apple Worldwide Developer’s Conference 2016 it felt like the dawn of a new era.

The new Messages framework in iOS 10 lets you create app extensions so users can interact with you directly within messages.  What this means for businesses and developers is, they can now create and share content with more features as well as real world solutions such as making payments without ever leaving Messages.

iMessage Update Details

With iMessage, apps developers can leverage the full framework to interact with Messages. This includes: presenting a custom user interface; creating a custom or dynamic sticker browser; inserting text, stickers, or media files into the Messages app’s input field; creating interactive messages that carry app-specific data; and update interactive messages to create games or collaborative apps.

The fun feature is Stickers, which lets you express yourself in more ways. This includes buying stickers from the App Store created by artists and developers with many imaginative options. Once you buy the sticker of your choice, you can adjust the size, send it in a thread or place it on photos, bubbles or other stickers.

The new features in the new Messages app on iOS 10 are:

  • Handwriting capabilities and personalization
  • Written text can be automatically converted to an Emoji
  • Tapback feature to quickly and visually respond to a message
  • Website preview in Messages
  • Listen to Apple Music directly in Messages
  • New bubble animations
  • Fullscreen iMessage animations
  • Conceal images or text behind an invisible message
  • New stickers on iMessage speech bubbles
  • Search for images and videos directly through Messages
  • Take pictures directly from Messages

For businesses that want to add real world functionality to Messages, they now have access to one of the most popular apps in iOS. The first solution that was highlighted at the Worldwide Development Conference 2016 event was Square Cash, an app for sending or requesting money with instant deposits to your bank account.

Once Square Cash is downloaded on your device, you can access it from the new iMessage “App drawer.” Pick an amount you want to send to a friend or pay for a service and attach it to a message, and with a single tap it will be deposited to their bank account.

Apple iMessage Update - Square Cash

This is not connected to Apple Pay, so the app has the limitation set by Square Cash. Make sure you read the instructions and bylaws carefully, because you are making your financial information available.

In addition to this payment system, Craig Federighi, Apple’s senior vice president of Software Engineering, demonstrated another iMessage app, DoorDash, an on-demand restaurant delivery service.

In the demo, Federighi was able to collaborate with a group to order lunch without leaving Messages. The order was then shared with everyone in the group through contacts in Messages and he added his lunch to the group ticket.

The iMessages features are in the development stage, so there weren’t many other apps made available during Worldwide Development Conference 2016.  There will undoubtedly be a large number of apps by the time the end user version of iOS 10 is available later in the fall.

Apple’s change in direction comes as the company is experiencing the first slowdown of iPhone sales in the company’s history. As hardware saturation continues to increase, Apple has to make itself more available just as Android has in order to give businesses more access to the iOS platform. We will have to wait and see what developers and businesses create, and whether Apple will make the rest of its OS available.

The developer page for iMessages is available here.

Images: Apple