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With 60% of Indians still in Rural India, it has a significant impact on the economic progress of the country, and with the emerging changes of ICT penetration, and the impact of demonetisation & Covid, alongside the digital initiatives carried out for rural segments, the need for improving the trends of digital payments model in rural India is very important. Considering the benefits like transparency in transactions, the scope for curtailing parallel economy and improving the ease of business, it is very essential that the transformation towards digital payments, even in the rural economy is empowered. Some of the revolutionary developments in the recent past like the launch of many digital wallets like – Paytm, etc. UPI (united payment interface) apps like Google Pay, Phone Pay, and AePS, M-POS, Micro ATM, Aadhar Pay have led to the smooth transition of digital payments.

Despite the fact that the social trends are being very positive in rural segments for embracing digital payments, still, there are considerable challenges too in succeeding the paradigm shift. Enabling digital payment transactions based on Aadhar numbers is proving to be a game-changer especially for cash withdrawals.


Indian economy is one of the fast-growing economies of the world. Despite global turbulences because of Covid. In the recent past, there are significant developments that have taken place in the Indian financial system, which has led to huge transformations, trends and changes in the business dynamics

  1. Though the government of India has been focusing on digital transactions initiatives since last few years, the actual impact of digital payments has taken place in India in significant manner post the Covid period.
  2. Post Covid UPI transactions has grown to 2200 million transactions per month from 1300 million transactions pre Covid.
  3. Post Covid AePS transactions has grown to 400 million transactions per month from 200 million transactions pre Covid
  4. In both the above growth drivers in digital transaction has been from rural India.
  5. Majority of the Indian economy depends on rural economy, and only when the digital payment methods become an integral part of rural economic development, the digital initiatives could be considered as successful and Post Covid there are signs of Digital Economy making an impact in Rural India.
  6. Many fintech’s players are offer various digital solutions & the market is gearing up towards more transparent and compliance based system.
  1. For successful implementation of digital transactions and digital banking system, certain key processes that are very essential are internet / smart phones /mobile banking, more of ecommerce presence in rural segments, digital transaction solutions like the PoS solutions , Biometric Solutions, usage in merchandise, usage of plastic currency etc.

This government bank is giving special training to women to earn lakhs, last date to apply is 31 March


In the recent past, many fin-tech companies are focusing on rural markets to increase its operational base and attaining a good market share.

Pre-covid period very few merchants and consumers from rural segments were using the digital payment solutions, post-covid has seen exponential growth in the number of users using PoS, Biometric devices for AePS withdrawal, QR code for UPI payment acceptance.

Government encouraging public with incentive schemes for using the UPI (United Payment Interface), reducing the service tax over digital transactions over government e-services signify that there is huge transformation taking place towards digital payments.


Digital payments in India is at nascent stage, and there is a push from varied quarters towards adapting the platform of digital payment solutions

Limiting the scope for cash payments

RBI has regulated the cash payments in a phased manner. For example, imposing restrictions and tax on cash purchase of jewellery beyond a prescribed value.

Imposing transaction charges for cash payments for payment to vendors, suppliers and services etc.

Imposing higher transaction charges for banking transactions like cash with draws, deposits etc.

More scrutiny over the cash transactions

Launch of More Digital Payment Solutions

Though India is cash based economy, slowly the transition has started towards digital economy.

RBI issuing payment bank licenses to many fin- tech companies like Paytm, Fino etc, who are leading the foray of digital payment options available for stakeholders like merchants and consumers.

Strategic launch of UPI solutions like BHIM by Government of India, & also enabling large private players like Google Pay, Amazon Pay, PhonePe etc to enable hassle free digital transactions

Aadhar based payment solutions that are emerging strongly in to the Indian market like AePS, Aadhar Pay signifies potential scope of carrying out digital payments even with feature phones.

Incentivising Consumers

RBI reducing or terminating the cross transaction cost for the bankers and UPI solutions to encourage them to reduce the cost of the transaction to the end-users.

Launching awareness programs, and encouraging as many feasible ways ( like feature phone-based digital transfers facilitated using Aadhar card etc.) has led to the way where more shops and establishments considering digital payment solutions in the rural sector.

Discounts for fuel purchase using digital payments like debit/credit cards is to encourage digital transactions.


In the current scenario the process of mobile banking, IMPS solutions has got simplified.

The increasing number of eCommerce companies offering their services in the rural segments also are the other key element that is driving the digital transaction solutions.

Direct and indirect initiatives from the government towards improving the banking ease, compliance standards and other such factors play a key role in the process.

Few of the significant initiatives like issuance of “RuPay cards” linked with Jan Dhan accounts (Zero balance accounts) opened up in massive scale, Kisan Credit cards issued to the farmers, drive in terms of enabling PoS & Biometric solutions to rural merchants etc. has created a fundamental platform that is essential for gaining momentum of digital payments in the rural segment.


India is among the fast emerging as one of the largest and strong economies. For sustained development and growth with robust economic development, certain integral factors like improved transparency, corporate governance and restricting the parallel cash-based economy. Such developments could be feasible only with rural India too embracing digital payments and digital transactions. Covid has been a blessing for the spread and usage of various Digital Payments right from Cards to UPI to AePS which has opened up opportunities that are unfolding the market dynamics of digital payments in rural India.

(Article by – S Anand, the Chief Executive Officer and Co-Founder of PaySprint, a Fintech venture focussed on Next Gen Neo Banking Solutions)

Read: Creditas Solutions launches India’s first holistic digital collections and recoveries platform – Ethera

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