A decade ago, buying almost anything without cash was unthinkable in India. Cash has historically been the main form of payment in the country, but electronic payments have gradually replaced it as the most common method of paying. The prevalence of smartphones, payment apps, booming e-commerce, and the hassle-free nature of online payments have all contributed to the exponential rise of digital payments. According to a KPMG analysis titled “Fintech in India-Powering mobile payments,” the number of merchants accepting digital payment methods has surged from close to 1.5 million locations in 2016–17 to over 10 million, in a matter of two to three years. Over the next few years, digital payments will grow rapidly, accounting for 71.7 percent of all payments by 2025.

Key Factors responsible for the growth of digital payments 

  1. Simple onboarding and ease of use

A payment gateway enables a business to accept electronic payments through its website or mobile application. Once a payment gateway is chosen, all the transaction-related operations are taken care of by the service provider. The process of partnering with a payment gateway is relatively simple and practically seamless. For instance, the Paytm Payment Gateway provides 100% online onboarding, rapid activation, and minimal documentation so that a business can begin collecting payments in less than 24 hours. When purchasing on the internet, customers can select from more than 100 different payment options.

  1. Increased awareness

Consumers have increasingly come to understand the modalities of digital payments and online firms have played a significant part in hastening the process. The spread of electronic payments was accelerated by demonetization and the pandemic, putting a bigger portion of the population on the path to digital transformation. Once the pandemic began, more than 80 million adults in India made their first digital merchant payment. Companies, government agencies, and other institutions continued to promote digital payment after that, increasing awareness of the technology.

  1. Smartphones and internet expansion

When compared to earlier times, India’s internet connectivity has increased dramatically over time, and the rollout of 5G telecom services is quickly approaching. With this expanded bandwidth, online communication has become quicker and simpler. Parallel to this, smartphone use has risen at an unparalleled rate, making India, the country with the second-largest digital population worldwide, after China. By 2026, there will be 1 billion smartphone users in India, and the sale of internet-capable phones is being driven by rural areas.

  1. Government policies

Among the government’s signature initiatives, Cashless India aims to digitally empower the nation and lead it toward a cashless society. Several policies have been implemented in the fields of technology and payment infrastructure to assist this innovative effort. Reserve Bank of India (RBI) issues new policies and rules regularly to promote digital payments.

  1. Speedy Transactions

When compared to traditional payment systems, digital payments are quick, hassle-free, and available 24/7. They integrate very well with e-commerce purchases and support reliable and robust payment. 

Paytm Payment Gateway maintains a low chance of payment failure or delay by processing up to 3000 transactions per second with 99.99% uptime.

Moreover, neither the client nor the firm has to track and follow up on the receipts. Texts, notifications, and confirmation emails make the process simpler and clear.

Why Is AI Necessary In The Payment Industry?

As the demand for digital payment grows, financial institutions must keep pace so that merchants and businesses with the right payment solutions can accept payments securely, quickly, and easily. The value of AI lies in its ability to manage and process large amounts of data every day. Increasing volumes of digital payments will necessitate the need for a scalable system to process and manage financial data. By incorporating AI, including machine learning, businesses can gain valuable insight into their customer behaviors, detect fraud, and make more accurate, smarter, and faster data-driven decisions. 

AI In Digital Payment

  1. Fraud Detection and Prevention: Artificial intelligence is the first line of defense against fraudulent transactions. AI can analyze user behavioral patterns such as keystrokes, mouse movements, and scrolling to create a unique profile for each user. This profile can be used to discover and identify any strange behavior and flag it for review. AI can also monitor customer service interactions to detect fraudulent activity such as phishing and social engineering attempts. Thus, artificial intelligence enables quick and accurate detection and elimination of consumer fraud. Merchants do not need to expend any additional effort.
  1. Increased Automation: The efficiency that AI brings to the payment sector through automation, is one of its most important benefits. The payment gateway business already employs machine learning to accelerate transaction authorization and monitoring. In addition, AI-enabled automated payment processing can eliminate human errors and improve efficiency. This exemplifies how firms are rethinking and redesigning their processes with the help of artificial intelligence.
  1. Better Customer Experience: AI can significantly enhance the customer experience for financial institutions and the digital payments sector. By providing customized service in a highly automated manner, AI-enabled chatbots that use natural language processing technology to conduct a conversation can disrupt several service businesses.

According to research, chatbot programs, if implemented for customer care and dispute resolution, may save banks billions of dollars and hundreds of millions of labor hours. By 2023, automated customer experience will save banks $7.3 billion in costs. 

Summing Up — AI & Experience Of Online Payments

Artificial intelligence is playing an increasingly important role in the world of digital payments. AI-powered solutions are helping to streamline and secure the payment process, reduce fraud, and improve the customer experience. With the ability to analyze vast amounts of data and make predictions based on patterns and trends, AI is transforming the way payments are made and managed. 

Overall AI is a game-changer for the digital payment industry and as technology continues to evolve, we can expect to see even more advanced AI-powered solutions emerge, making payments more secure, convenient, and efficient for everyone involved.

Edited By: Naga Vydyanathan