Indians are switching to digital payments in droves

THE ALLEYS of the 150-year-old Chor (Thieves’) Bazaar, a colourfully named flea market in Mumbai, are crammed with goats, used tyres, speakers, drills and other assorted ephemera. But even in this unlikely place, modern payment methods are gaining a foothold. In stalls abutting the market, bags of sand can be paid for by providing a phone number or scanning a QR (quick response) code. Many countries have seen digital payments take off in the past few years; in India, where little over a decade ago a cheque could take more than two weeks to clear, it feels like a revolution.

It is one that has been shaped, not always intentionally, by government policies. September 2010 saw the arrival of Aadhaar, a system of biometric IDs that could be used to open a bank account. After becoming prime minister in 2014, Narendra Modi chivvied bankers to open accounts for everyone. Around 360m basic “Jan Dhan” (people’s wealth) accounts were opened, adding to the 243m accounts already in existence. But many sat empty, or held just a rupee or two put in by banks under government pressure to reduce the number of zero-balance accounts. 

Two further developments gave those unused accounts a purpose. The first was the launch in 2016 of the Unified Payments Interface (UPI), an interbank money-transfer system. The second was “demonetisation...



via The Economist: Finance and economics Business Feeds

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