Accelerating Financial Inclusion: The Role of Payment Systems

This paper provides fresh perspectives on ways to catalyze growth in electronic payments and accelerate financial inclusion. It examines the evolving prepaid instruments landscape in India and the case for electronic rupees issued by the Reserve Bank of India (RBI). It studies how an increased penetration of point-of-sale payments would be possible in India, and also how the evolving payment ecosystems can function as shared service models for inclusion and growth. Concluding with a discussion on government imperatives to promote electronic payments, the paper makes the following observations:

• Prepaid instruments (PPIs) could see dramatically accelerated growth in India from the prepaid card and prepaid mobile wallet segments;
• Counting assumptions to hold true, INR 8743 billion will likely be made in payments in FY2020 through PPIs, more than 12 times the volumes in FY2013;
• Existing approaches to propagate mobile money have not worked so far and the key issue is one of roles and incentives- across the RBI, banks, and telcos;
• Banks can no longer just function as acquisition engines. They need to become more innovative across the retail payment value chain- from acquisition, lifecycle management, segmentation, product development to retention.