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The rise of real-time payment systems in India has been nothing short but a revolution around how we transact. The introduction of innovations like the Unified Payments Interface (UPI) and mobile wallets not only brought financial inclusivity but also made digital payments more accessible for all. The digital payments market of India is expected to grow threefold to its current value, with a value projection of USD 10 trillion by 2026. And, this financial ecosystem which is driving the economic growth of the country is deeply intertwined with the advancements of telecommunications and digital infrastructure, which serves as a backbone for the seamless operation of real-time payment systems.
Role of Telecommunications in Real-time payments expansion
The widespread adoption of UPI and other real-time payment systems hinges on the robust telecommunications infrastructure of the country. With over 1.2 billion active mobile phone users in India and increasing smartphone penetration, the reach of real-time payment systems is expanding at a significant pace. The predominance of UPI is also supported by affordable data plans and widespread 4G networks which provide enhanced accessibility, enabling seamless real-time transactions.
Unified Payments Interface (UPI) since its inception in 2016, has become a cornerstone of India’s digital payment revolution. According to the reports, by 2023 UPI was processing over 15 billion transactions per month. In July 2024, UPI recorded over 20.64 trillion in transaction value, positioning it as a catalyst for India’s digital and financial inclusivity.
Government Initiatives fueling Financial Inclusion
Along with the advancements made at the industrial level, government initiatives like Digital India and Pradhan Mantri Jan Dhan Yojana have played a pivotal role in promoting financial inclusion and digital literacy. It has also give a boost to the economic growth of the nation as real-time payment systems have a direct correlation with economic growth. A study by ORF shows that a 1% increase in UPI transaction volume is associated with a 0.03% rise in GDP. Since its inception, UPI alone has saved the Indian economy approximately USD 67 billion through reduced transaction costs and increased efficiency.
Launched in 2015, the Digital India initiative has been instrumental in extending internet connectivity to rural and underserved regions. Key projects include the expansion of fiber-optic networks, satellite-based internet services, and public Wi-Fi hotspots. These efforts have created a robust foundation for the growth of real-time payment systems.
Mobile Wallets: Bridging the Gap for the Unbanked
While India’s real-time payment ecosystem is thriving, challenges like cybersecurity threats and inadequate digital infrastructure in rural areas persist. However, ongoing government initiatives and technological advancements promise to address these issues. By FY 2025-26, India’s digital payments market is projected to reach $10 trillion, with digital payments accounting for two out of three transactions.
Ankur Saxena, Senior Director and Head of Sales, South Asia & Middle East (UAE & Oman) at ACI Worldwide highlights the critical role mobile wallets play in bridging the gap between real-time payment systems and unbanked populations. He stated, “Mobile wallet adoption is crucial in bridging the gap between real-time payment systems and the unbanked population by providing an accessible and user-friendly entry point into the formal financial system. According to ACI's 2024 Prime Time for Real-Time report, there is a strong correlation between real-time payment growth and mobile wallet adoption. In 2023, 90% of consumers in India have used mobile wallets.
Mobile wallets enable users to store money digitally, send and receive payments instantly, and access essential financial services such as bill payments, savings, and even micro-loans. By integrating with real-time payment systems such as UPI in India, mobile wallets provide seamless access to broader financial networks, allowing users to transact with banks, businesses, and government platforms.
Mobile wallet adoption is further driven by the widespread penetration of smartphones and affordable internet access, making digital financial tools available to millions in rural and underserved areas. QR codes linked to mobile wallets are central to widening adoption. The intuitive interfaces of these wallets, often available in regional languages, reduce the learning curve, encouraging adoption among populations with limited literacy or technological familiarity. This accessibility promotes trust in digital financial systems and empowers individuals to manage their finances independently, driving greater financial inclusion."
A Look Ahead
The real-time payment systems have completely transformed the Indian financial landscape, driving financial inclusion, economic growth, and technological innovation. Along with the robust telecommunications and digital infrastructure, RTO systems are set to transform India into a globally recognized leader in digital payments. As projected India’s digital payments market is to reach USD 10 trillion by FY 2025-26, in which two out of three transactions will be made digitally. In terms of achieving the same streamlined government initiatives, the expansion of internet connectivity and digital advancements made by the industry will play a crucial role.