AN ANALYSIS OF THE EFFECT OF DIGITAL PAYMENTS IN INDIA

ABSTRACT

With the rapid evolution of digital payments systems, worldwide countries are increasing their economies, eradicating challenges like counterfeit currencies and black money, terrorist funding, and stabilising and formalising their economies. Innovative payment systems like UPI and Aadhaar-based payment system are all examples of India’s leadership in the global market (AEPS). Transacting digitally means using a debit or credit card, an E-wallet, or online banking, all of which eliminate the need for physical currency. With the implementation of demonetization on November 8, 2016, the current administration in India has encouraged the digital economy. Economic formalisation, improved tax revenue, and increased growth were all aided by demonetization measures. Demonetization’s principal goal was to transform India from a tax-dodging nation to a tax-paying society. Investments in the economy are now being made with the money that was sitting in the homes of black marketeers before it was brought back into banking and circulated in the economy. When demonetization was implemented in India, the most significant problems were a lack of point-of-sale (POS) terminals, a lack of internet penetration in rural regions, a lack of awareness in the unorganised sector, and the potential of cyber fraud. For policymakers, banks, and consumers alike, this study aims to shed light on the current state of India’s digital economy and the problems it faces moving forward.

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