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Ankur Saxena, Senior Director of Sales for South Asia, Middle East, and East Africa, ACI Worldwide
Real-time payment systems have emerged as a transformative force, reshaping the way individuals, businesses, and governments transact. For a country like India, where financial inclusion and economic growth are intertwined, these systems hold immense potential to bridge the gap between the formal financial sector and marginalized communities. Leveraging technologies like artificial intelligence, machine learning, and the Unified Payments Interface (UPI), real-time payments have not only streamlined transactions but also created opportunities for millions to access formal banking services for the first time.
This interview with Ankur Saxena, Senior Director and Head of Sales, South Asia & Middle East (UAE & Oman) at ACI Worldwide, explores the multifaceted impact of real-time payments on India's financial ecosystem, delving into their role in combating financial fraud, empowering unbanked populations, and driving government initiatives. By examining the empirical link between real-time payments and financial inclusion, we uncover how these systems are laying the foundation for a digitally inclusive and economically resilient India.
Excerpts:
DQ: How do real-time payment systems address the issue of financial fraud or cybersecurity risks for the newly banked populations?
Real-time payment systems address financial fraud and cybersecurity risks for the newly banked population by integrating advanced technologies, user-focused designs, and robust education initiatives. These systems leverage artificial intelligence (AI) and machine learning to monitor transactions in real time, detecting suspicious patterns or behaviors that may indicate fraudulent activity. Fraud prevention solutions powered by AI can analyze and interpret data in real time, providing insight into whether a transaction is potentially fraudulent. By comparing current activity with historical transaction data, AI-powered solutions can quickly detect and signal what could be a fraud.
To cater to the newly banked population, these systems emphasize accessibility and education. Overlay services simplify the payment experience by offering intuitive interfaces that mask the system's technical complexity. For example, users can initiate payments using familiar methods like QR codes or phone numbers, which reduces the risk of errors and enhances usability.
DQ: How can real-time payment systems be used as a tool for government initiatives, such as direct benefit transfers or subsidies, to enhance their effectiveness?
Real-time payment systems enhance government initiatives by enabling instant, secure, and transparent fund disbursement. One of the most prominent initiatives in India is the Direct Benefit Transfer (DBT) program, which ensures that subsidies and welfare benefits reach the intended recipients directly through their bank accounts. This program covers a wide range of schemes, such as the Pradhan Mantri Kisan Samman Nidhi (PM-KISAN), which provides financial assistance to farmers, and the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), under which wages are directly deposited into 'workers' accounts.
By combining efficiency, transparency, and accessibility, real-time payment systems significantly enhance the impact of public welfare programs. Real-time payments ensure that payments reach beneficiaries' accounts without delays or intermediaries, reducing corruption and fund leakage. Intuitive interfaces and real-time notifications make accessing funds simple and inclusive, bridging gaps in financial literacy. These systems also assist government to monitor and audit transactions in real time, ensuring accountability and improving program efficiency. Their speed and scalability make them ideal for emergency relief, while data insights enable better policy adjustments and outreach.
DQ: How might consumer behavior and payment habits evolve as real-time payments become more pervasive in India?
As real-time payments become ubiquitous in India, consumers have gravitated toward digital, instant, and secure payment methods, reshaping habits around convenience, financial transparency, and inclusion while reducing reliance on cash. According to ACI's 2024 Prime Time for Real-Time report, India continues to dominate the global real-time payments market, with 129.3 billion transactions in 2023. Of all electronic payments made in India, 84% are now real-time
Consumers increasingly prefer real-time payments for day-to-day transactions, such as retail purchases, bill payments, and peer-to-peer transfers, due to the instant settlement and enhanced user experience. The adoption of mobile wallets and payment apps integrated with real-time payment systems will continue to increase, as they simplify the process of transferring money and managing finances. The pervasive use of real-time payments will also drive behavioral changes in financial management. With instant notifications and detailed transaction histories, consumers will gain better visibility into their spending, leading to more informed financial decisions.
As businesses increasingly adopt real-time payment systems, consumer expectations for instant transactions will grow, making delayed settlements or traditional payment methods less attractive. Subscription services, e-commerce, and even recurring payments like loans or utilities will see wider acceptance of automated, real-time transactions.
DQ: According to the report, real-time payments boosted India's GDP by $50 billion in 2023. What are the key factors behind this substantial economic impact, and how has it reshaped India's financial ecosystem?
Real-time payments have significantly boosted India's GDP by transforming its financial ecosystem through increased efficiency, financial inclusion, and innovation. It has expanded access to formal financial services, bringing millions of unbanked and underbanked individuals into the digital economy. According to ACI's Real-Time Payments: Economic Impact and Financial Inclusion report, India is ranked among the top three countries for financial inclusion uplift globally. By enabling instant and secure transactions, they have accelerated the velocity of money, ensuring that funds circulate more quickly, fueling consumption, investment, and overall economic activity.
For small businesses, real-time payments have been a game-changer. Immediate settlements have improved cash flow management, reduced reliance on high-cost credit, and allowed for quicker reinvestment of earnings. This has enabled many small and medium-sized enterprises, which form the backbone of India's economy, to scale operations and contribute more effectively to GDP growth. At the same time, the digitization of transactions has reduced reliance on cash, minimized inefficiencies, and promoted transparency, curbing the informal economy and broadening the government's tax base.
Real-time payments have also catalyzed innovation within the financial ecosystem. The fintech sector has flourished, developing new payment solutions and financial products, while increased competition among banks and financial institutions has driven improvements in services and cost-efficiency. This digital revolution has reshaped consumer behavior, with a growing preference for seamless, fast, and secure payment options driving growth in sectors like e-commerce, retail, and digital services.
DQ: Can you elaborate on the empirical link between real-time payments and financial inclusion as outlined in the report? Specifically, how have these systems helped marginalized communities access financial services?
Real-time payments can foster financial inclusion by reducing costs, improving efficiency, and enhancing consumers' overall experience engaging with financial institutions. Traditionally, banking fees associated with late payments and low account balances have deterred low-income consumers from accessing formal banking services. However, the widespread adoption of Unified Payments Interface (UPI) has significantly enhanced financial inclusion by providing immediate access to funds and reducing dependency on cash transactions.
In collaboration with The Centre for Economics and Business Research (Cebr), our Real-Time Payments: Economic Impact and Financial Inclusion report leverages data from 40 countries and reveals—for the first time—an empirical link between real-time payments and financial inclusion, especially among three demographic groups: younger people (aged 18-24 years); women; and people in lower income groups (40% of the population with the lowest incomes).
The report presents country-specific projections for the number of newly banked individuals expected by 2028, estimated based on forecasted changes in the payment mix. By 2028, 25.5 million Indians previously excluded from the financial system could have bank accounts. The research indicates that by providing citizens with access to affordable financial services, real-time payments drive economic growth and could potentially help lift millions of people out of poverty.
DQ: How do real-time payments empower unbanked communities, and what role do they play in accelerating financial inclusion in India?
Real-time payment systems have significantly advanced financial inclusion by reducing barriers to accessing financial services, especially for unbanked communities. These systems enable affordable and instant transactions through mobile devices, bypassing the need for traditional banking infrastructure. This is particularly impactful in underserved areas, where mobile penetration far exceeds access to physical bank branches or ATMs. For those without smartphones or reliable internet, UPI has introduced Unstructured Supplementary Service Data (USSD)-based banking, allowing transactions through simple text commands on basic feature phones.
By streamlining account creation and linking payments to national identification systems, such as Aadhaar in India, real-time payments make it easier for individuals to join the formal financial system. India Post has further enhanced access by integrating its vast network into the real-time payment ecosystem through the India Post Payments Bank (IPPB). Postal workers equipped with digital devices now deliver financial services directly to villages, making it easier for people in remote areas to participate in the formal financial system.
For small businesses in marginalized areas, real-time payments reduce dependency on cash, expand customer reach, and create digital transaction histories that improve access to credit. Empirical evidence from India, where systems like UPI have brought millions into the formal economy, underscores the ability of real-time payments to empower individuals and communities, fostering economic participation and resilience.
Offline payment solutions are another key area of development. Initiatives like offline UPI through QR codes or NFC-based payments can enable transactions without real-time connectivity, syncing with the network later when internet access becomes available. These solutions are particularly beneficial in rural areas where intermittent network coverage is common. Infrastructure development is critical for expanding the reach of real-time payment systems.
The Digital India initiative, launched by the Indian government in 2015, envisioned to transform India into a digitally empowered society and knowledge economy. It aims to improve connectivity in rural and underserved regions by extending internet coverage, including through public Wi-Fi, fiber-optic networks, and satellite-based internet services. These efforts are complemented by promoting digital literacy programs to ensure individuals can effectively use digital payments.