Regulation of Payment Systems in India

1. The Reserve Bank of India (RBI) has released the ‘Payment System Report, December 2024’, which provides an in-depth analysis of trends in payment transactions over the last five calendar years (CY), up to CY-2024.
2. This bi-annual report evaluates the growth and evolution of India’s payment ecosystem, particularly in digital transactions.
    

Key Findings of the Report
 

1. Surge in Digital Payment Transactions

1. In 2013, there were 222 crore digital transactions amounting to ₹772 lakh crore.
2. By CY-2024, digital transactions have grown 94 times in volume and over 3.5 times in value, highlighting India's rapid transition toward a digital economy.

2. Growth of Unified Payment Interface (UPI)

1. UPI transactions have recorded a Compound Annual Growth Rate (CAGR) of 74.03% in volume and 68.14% in value over the past five years.
2. UPI continues to be the dominant digital payment mode in India, driving financial inclusion and digital adoption.

3. Credit and Debit Card Trends

1. The number of credit cards has more than doubled in the last five years, reflecting an increase in consumer credit and online transactions.
2. Meanwhile, debit card usage has remained relatively stable, as consumers increasingly shift toward UPI and other digital payment methods.

4. India’s Participation in Global Payment Initiatives

1. India has joined Project Nexus, a framework aimed at multilateral linkage of Fast Payment Systems (FPS) among: Malaysia, Philippines, Singapore, Thailand and India.
2. Project Nexus, conceptualized by the Bank for International Settlements (BIS), facilitates instant cross-border retail payments by interlinking domestic FPS platforms.
    

Understanding Payment Systems in India
 

1. Definition: Payment systems are mechanisms designed to facilitate the clearing and settlement of monetary and financial transactions.
2. Role of RBI: As the regulator, RBI oversees, develops, and enhances the efficiency and security of India’s payment infrastructure.
3. Key Components: India’s payment ecosystem consists of multiple channels, including UPI, card networks, digital wallets, and Real-Time Gross Settlement (RTGS) systems.