Explaining Local Payment Channel Options and Access in India: India's Three-Party Payment Companies

India is a key market for Chinese companies expanding overseas, not only because of its huge human resources (China's population is 1.44 billion, India's is 1.39 billion), but also because of its remarkable economic potential. For companies entering the Indian market, finding the right local payment gateway is crucial for local payment collection. So what is the current payments landscape in India, which payment gateways need to be integrated and how to access them?

**Status of payments in India**

**Cash dominance and the rise of digital payments**

According to JP Morgan, the number of savings cards per capita in India is just 0.64 and the number of credit cards is 0.02, compared to 6.01 bank cards per capita in China. This indicates that banking coverage in India is relatively low and a large portion of the population is not using banking services. Cash is still the dominant mode of payment in Indian society, with card payments and mobile payments accounting for only 211 TP3T of physical retail transactions.Currently, mobile payment transactions account for 11 TP3T-21 TP3T of online transactions, and this is expected to increase to 3.51 TP3T by 2025 (Source: Times of India).

**Smartphone penetration and favourable policies**

The payments landscape in India is undergoing a major transformation, with cash payments being the norm while new payment methods and habits are emerging. This shift has been influenced by smartphone penetration, currency exchange policies, the push for a cashless society and the new crown epidemic. The digital payments industry is now growing at a rapid pace.

**Harmonisation of government planning and a bright future**

The Indian government has a unified plan for digital payments, with the launch of the Unified Payments Interface (UPI) in 2016 to facilitate inter-bank transactions, which is regulated by the Reserve Bank of India. The e-wallet space has attracted the attention of domestic and international investment organisations, giving rise to several unicorn companies. The number of mobile payment users is expected to increase to 800 million by 2025, indicating a bright future for the industry.

**Unified Payment Interface (UPI)**

UPI Payments was developed by the National Payments Corporation of India to enable real-time fund transfers between banks. Currently, more than 20 payment apps and over 200 banks have joined UPI, with 2.3 billion transactions per month and a transaction value of Rs. 4,161.76 billion (approx. $580 billion), making it the largest online payment system in India.

**Bank integrated with UPI**

Mainstream banks integrated with UPI include State Bank of India, Punjab National Bank, ICICI Bank, Union Bank of India, Indian Overseas Bank, HDFC Bank and 207 other banks.

**Third-party applications integrated with UPI**

**Electronic purse of India**

Indian e-wallets have attracted the attention of global capital, with major players including GooglePay, Paytm, PhonePe, Mobikwik, AmazonPay and Freecharge.GooglePay and AmazonPay are backed by international internet giants, PhonePe is a payment platform owned by retail giant Walmart , Mobikwik has received investments from Sequoia Capital, American Express and Japan's GMO.Paytm's key investors include Ant Financial, SoftBank Group and Berkshire Hathaway. The entry of international capital has not only fuelled the rapid development of e-wallet technology, but also accelerated the formation of the e-wallet payment market through fierce market competition.

Indian e-wallets are primarily used for online and offline payments, covering a wide range of payment scenarios from online e-commerce platforms, ticket bookings, account top-ups (gaming, live streaming, subscriptions, etc.), bill payments, online transfers, to offline shops, supermarkets and restaurants.

**India Local Payments Integration**

For companies expanding into India, it is crucial to consider integrating Unified Payments Interface (UPI) and internet banking. Most e-wallets have already joined the UPI platform to achieve full coverage in India. Integration of local payments in India can be achieved through third-party gateways such as PayerMax, providing one-time access to popular local payment methods.

**UPI integrated payment process**

1. User selects UPI during PayerMax checkout.

2. The user is directed to a page where he/she fills in his/her name and e-mail (the user must provide accurate information).

3. User enters UPI account and submits payment.

4. The user selects the preferred payment method to complete the transaction.

5. Payment completed.

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