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Cashless Payment Options in India

Updated on February 27, 2017

The Rise of Cashless Payment Options in India

In the last 6 months, India witnessed two major developments or reforms; namely, the fall of cash and the rise of the Cashless Payment Options.

The world knows the first one by the name “Demonetization” in which Rs.500/- INR and Rs.1000/- INR bills, two of the most used currency notes, were declared demonetized overnight by the PM Narendra Modi on November 8, 2016 in his address to the nation, and the entire India came standing on its heels and toes in queues. Different people may have different opinions regarding the objective and consequences of this action, and we’ll let think-tanks storm their big brains over whether or not it was a well pre-calculated move with a political motive or a hard-blow on the black-money & corruption or an attempt to discourage funding for terrorism and whether or not this move succeeded in achieving any of these goals; one thing is for sure, and that is this period will be remembered as the period of advent of the cashless payment options.

The nation understood that this cash is not going to get back in the market very soon and it gradually switched to these options, some willingly and some unwillingly, and suddenly the market went hi-tech. While the smart-phones suddenly became pocket-banks and went on to be the number one choice, the others were not far behind either. Every option had its own set of advantages and was targeted towards a specific group. Some of these cashless payment options were internationally known, some were very Indian, some had already been in use since long and some were premature babies made to born in that era with a Caesarian and are still growing up.

From the humble Cheques & Demand Drafts to the state-of-the-art AEPS; from the blue-blood Credit Cards & Debit Cards to the time-tested NEFT, RTGS and Green Channel; from the internationally acclaimed E-Wallets like PayPal to the Mobile Wallets like Paytm & MobiKwik; from the Government sponsored services like USSD and interfaces like UPI to the very new applications (apps) like BHIM, they come in all shapes, sizes & colours. You need to study these Cashless Payment Options one-by-one and see what makes each one different from the other and then pick up the one best for you.

Before we take a look and understand these options, we must first know what NPCI is;

NPCI - National Payments Corporation of India

NPCI or National Payments Corporation of India: This corporation which came into existence in December’ 2008, is basically a regulatory body that monitors, regulates and controls all the Retail Payment Systems existing in India. This noble idea of bringing all retail payment systems, functioning at various levels and offering different types of services for meeting different requirements, under a single regulatory roof and thereby developing an integrated & dedicated platform for them, actually struck the Reserve Bank of India (RBI) after it set up the Board for Regulation and Supervision of Payment and Settlement Systems (BPSS), back in 2005. So, the credit for this innovative idea goes to RBI. But this dream could not have been realised without the relentless efforts & contribution of the Indian Banks’ Association (IBA).

Formed under Section 8 of Companies Act 2013, and authorised by the BPSS to start operating w.e.f. 15th October 2009, the National Payments Corporation of India is a non-profit corporation governed by a board of ten major banks as its founder / promoter members. These banks are;

  • State Bank of India
  • Union Bank of India
  • Bank of India
  • Punjab National Bank
  • Canara Bank
  • Bank of Baroda
  • HDFC Bank
  • CitiBank
  • ICICI Bank
  • HSBC

At present, Shri Balachandran M. is the Non-Executive Chairman of this board and is also the independent director.

NPCI "National Payments Corporation of India" logo

Logo of National Payments Corporation of India
Logo of National Payments Corporation of India | Source

Products & Services of NPCI

Now, if you thought that only job left with this corporation is monitoring, governing and storming its brains, then you are mistaken. This prestigious corporation also has some brilliant products and services up its sleeves to boast about. These are;

  • RuPay – A highly successful domestic card payment network system
  • RuPay Pay Secure
  • National Financial Switch (NFS) – NPCI took over NFS operations w.e.f. 14thDecember 2009.
  • Immediate Payment Service (IMPS)
  • National Automated Clearing House (NACH)
  • Unified Payment Interface (UPI)
  • Cheque Truncation System (CTS)
  • Aadhaar Enabled Payment System (AEPS)
  • Bharat Bill Payment System (BBPS)
  • *99# - A USSD supported Mobile Banking facility
  • Bharat Interface for Money (BHIM) app.
  • Aadhaar Payments Bridge System (APBS)
  • National Common Mobility Card (NCMC)


These Cashless Payment Options have for sure made our lives easy & made the transactions more transparent. One seldom needs to carry even his/her credit/debit card now. The mobile phones have brought your banks in your pocket. Many people have already started seeing this as the first step towards a completely cashless economy in future, and that is most welcome.

Although most of these facilities were already there before this current government led by Prime Minister Narendra Modi took over, but certain steps taken by this government has suddenly made them indispensable, and has brought almost everyone under government's radar.

There are plenty of these options, from different nationalised and private sector banks, with their own sets of advantages and targeted towards various needs. I shall first start with the NFS in the next post, and move on to the others in subsequent posts one-by-one.

Until then, keep the pace!


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