A decade ago, the idea that you could just walk into your ‘bagal wali dukaan’ without cash and still make payments would have sounded revolutionary. But today, even a chai-wala accepts digital payments. With the outbreak of the Coronavirus pandemic and the social distancing rules, digital payments got the much-needed push to slowly and steadily becoming ubiquitous.

It has been almost eight months that India and the whole world has been, at various levels of lockdown, due to the COVID-19 pandemic. Even before that, we have seen focussed efforts from the governments of most countries to promote a less-cash economy. The premise being – lesser cash will lead to lesser costs for the governments related to printing and lifecycle management of physical cash and subsequent migration of businesses from the parallel economy to the mainstream.

Another big benefit of the digitisation vision is to solve for enabling credit facilities to a vast population of small businesses and entrepreneurs, from organised lender institutions. This is currently not possible as they do not have adequate banking transaction history and hence are forced to take loans from the unorganised sector which is often at a higher cost and loan amounts are possibly much less than what they deserve against the collaterals taken by money lenders. Clearly, digital payments will continue to grow in future as it is a declared vision of many governments as well as regulators.

There will be various levels of evolution in different countries – with countries like China, far too ahead on the QR code-based payments ecosystem as compared to the world; India, fast adopting to digital payments in the metro and urban landscape; while US and Europe creating inter-bank architectures to help drive their initiatives in digitisation. Here are a few trends in digital payments to look out for in 2021:

To keep up with the demands of the enormous group of Gen Z shoppers – who have grown up with the internet and who will constitute a major segment of shoppers in the years to come – businesses will need to innovate their use of payments and become fully digital.

While online shopping would not be more than 10 to 15% of the overall commerce in a country like India, it is huge in developed economies and hence this model can only move up from where we are. Many reputed researchers predict that that online e-commerce model in India will double in the next two to three years. The only way of making payments on such e-commerce businesses is through digital means and hence digital payments will see a lot of focus and innovation in the next few years