India’s Digital Payments Witness Remarkable Growth in FY23: RBI-DPI

India's Digital Payments Witness Remarkable Growth in FY23: RBI-DPI
India's Digital Payments Witness Remarkable Growth in FY23: RBI-DPI

The fiscal year 2022-2023 (FY23) witnessed a remarkable surge in digital payments in India, as indicated by the Reserve Bank of India (RBI) Digital Payments Index (RBI-DPI). This comprehensive index, which measures the extent of payment digitization, displayed significant growth across all parameters during this period, fueled by notable advancements in payment infrastructure and performance across the country. The RBI-DPI for March 2023 recorded a value of 395.58, representing a substantial 13.24% increase compared to September 2022 (377.46), as announced on January 31, 2023.

The RBI-DPI has been on a steady upward trajectory since its inception in March 2018, with a base index value of 100. Updated semi-annually with a four-month lag, it serves as a reliable gauge of digital payment adoption in India.

The RBI-DPI evaluates five major parameters, each representing critical aspects of payment digitization:

  1. Enabling Environment: This parameter assesses the factors facilitating digital payment adoption, including the availability of digital wallets, mobile banking services, and internet penetration.
  2. Consumer Experience: Focusing on the consumers’ end, this parameter examines the accessibility and ease of using digital payment platforms, encompassing point-of-sale (POS) devices and payment gateways.
  3. Payment Infrastructure: This parameter evaluates the robustness and efficiency of payment systems and infrastructure on the provider’s side, encompassing banks and financial institutions.
  4. Transaction Effectiveness: This parameter gauges the effectiveness of digital payment transactions, including transaction success rates, speed, and reliability.
  5. User Satisfaction: A crucial aspect of digital payments, this parameter measures the overall user experience and user-friendliness of digital payment platforms.

The RBI-DPI has exhibited consistent growth over the years. In March 2022, the index recorded a value of 349.30, showcasing a significant increase from 270.59 in March 2021 and 304.06 in September 2021.

The Unified Payments Interface (UPI) has been a key driving force behind the surge in digital payments in India. According to a recent report by PwC India, UPI transactions are projected to reach a staggering 1 billion transactions per day by 2026-27. Notably, UPI transactions have accounted for approximately 75% of the total transaction volume in the retail segment during the FY22-23 period.