The digital payments industry is a vital component of India’s rapidly growing digital economy, expected to achieve a 27% CAGR between FY20-25, with transaction values projected to surge from Rs 2,153 lakh crore in FY20 to Rs 7,092 lakh crore in FY25. This growth is driven by factors such as the expanding consumer base, increased smartphone and internet access, and a strong focus on digital financial inclusion. Moreover, the sector benefits from fierce competition, technological innovation, and a commitment to enhancing consumer convenience. Small businesses are also joining the digital payments ecosystem, thanks to incentives from payment service providers, streamlined processes, and pandemic-induced shifts toward cashless transactions. The regulatory framework established by the RBI is crucial in balancing consumer convenience and financial data security in this dynamic landscape. Additionally, there is a growing emphasis on integrating online and offline markets through digital payments, making it a pivotal aspect of India’s economic growth.
More recently, the RBI introduced rules that disallowed storage of Card on File (CoF) by merchants and aggregators. However, card issuers were allowed to store details. A CoF or stored credentials, is the card information stored by a merchant, PG, PA or digital wallet to process future transactions. These rules may also be supplemented with proposed guidelines for CoFT , which is the only RBI approved alternative to storing CoF, and seeks to balance the convenience of storing necessary financial data of customers on the merchant platform, while ensuring the need for the safety and security of such data. Reducing the retention of CoF data has also been seen as an instrument to control the sharing of sensitive customer data with third parties and giving customers more autonomy in the sharing of such data.
Authored by:
Anand Venkatnarayanan – Strategic Advisor, DeepStrat
Ayush Tripathi – Senior Research Associate, The Dialogue
Gautam Kathuria – Senior Research Associate, The Dialogue
Saksham Malik-Senior Research Associate, The Dialogue
