By Kajal Verma There’s no question why prepaid digital solutions have become so popular in India. They are an alternative to traditional banking systems for those unable to open a bank account or have limited access to financial services. They also offer convenient and secure ways of making payments online without carrying cash or credit cards around you. With the increasing popularity of digital payment gateways in India, it’s only natural that we take some time to analyze the scope and future of this sector.
The digital payment sector has enabled users to make quick payments without hassle or paperwork, making them ideal for those who need to make payments regularly. A typical digital payment solution offers greater security as prepaid cards and mobile wallets require users to enter their PIN code when making transactions.
Categorization of Prepaid Digital Solutions in the Indian Market
India’s digital market is booming, driven by the rapid development of payment technologies. The solutions are officially termed prepaid payment instruments (PPI).
PPIs are generally sorted into two categories: Small PPIs and Full KYC PPIs. The former, also called minimum-details PPIs, can be further broken down into:
- PPIs up to Rs.10,000/- (with cash loading facility).
- PPIs up to Rs.10,000/- (with no cash loading facility).
PPIs can alternatively be classified into three distinct categories:
- Closed System PPIs: These Payment Platform Instruments (PPIs) are issued to procure goods and services from the issuing entity solely to streamline purchasing. Moreover, they do not permit cash withdrawals, so RBI authorization is unnecessary.
- Semi-closed System PPIs: These prepaid cards do not permit cash withdrawals; instead, they are accepted by a selection of merchants and financial services providers who have partnered with the issuer entity.
- Open System PPIs: Issued exclusively by banks, debit cards allow cardholders to withdraw cash at any merchant establishment. These withdrawals can occur in person via ATMs or Point of Sale (PoS) terminals. Such transactions are secure and convenient and enable customers to access financial services that may not have been available otherwise.
Different Types of Prepaid Digital Solutions in India
Digital prepaid solutions are becoming increasingly popular as effective payment methods, money transfer and financial management tools. From prepaid cards to mobile wallets, various platforms are available to satisfy the needs of all types of customers.
Prepaid cards are prepaid debit or credit cards that can be used for various purchases, including online shopping, travel bookings and more. They offer the convenience and security of a regular credit/debit card without requiring users to open up any new account or apply for a loan. Prepaid cards also typically have lower fees than traditional bank accounts, making them an attractive option for affordable digital payment solutions.
Mobile wallets are apps that allow users to store, send and receive money from their phones. This digital prepaid solution is becoming increasingly popular in India as it allows users to securely make quick payments at merchants or securely transfer money to friends and family. Mobile wallets also generally offer lower fees than prepaid cards, making them a great choice for those who need an affordable digital payment solution.
UPI is one of most commonly used prepaid digital solutions in India these days. Unified Payment Interface (UPI) is a payment platform that allows users to quickly and easily send, receive and manage payments directly from their smartphones. It’s safe and secure, making it an ideal option for a convenient digital prepaid solution.
Different Ways Digital Prepaid Solutions Affect Everyday Life
Digital payment solutions are also having an impact on how people go about their daily lives. For example:
- M-wallets or mobile wallets have become increasingly popular and provide a convenient way to pay for goods and services and securely store money.
- Prepaid debit cards are becoming more widely accepted, making it easier for individuals to make payments online or in-store without carrying cash.
- Mobile prepaid solutions also allow users to keep track of their spending and manage their finances better by providing access to real-time information about their account balance.
What are Market Predictions?
Yahoo Finance’s research showcases a remarkable opportunity for the Indian prepaid card and digital wallet market. It estimates it will increase to $105.43 billion by 2026 from a starting point of only $35.69 billion in 2022. It represents a growth rate at a CAGR of 31.1%.
It is a clear indicator of how prepaid payment gateways will continue to grow in popularity and be an essential part of the Indian financial landscape.
Conclusion
Prepaid digital solutions have proven to be highly beneficial for consumers, allowing them to make payments quickly and securely without worrying about carrying cash or credit cards around. They offer great potential for businesses and entrepreneurs as they can expand their customer base and offer more attractive products. With increasing competition among providers, we expect every digital payment solution will become even more popular over time and remain a key part of India’s financial sector.
