UPI opportunity in Rural India
By Puneet.G.S
Rural Digital Economy
. The rural economy will become the next digital economy of
India. Adoption of digital payments can lead to more digital
revenue, innovation across banking and digital products, and
will create a multi billion-dollar market. Creating tailor-made
offerings that are based on their average source of income,
frequency of purchase, tastes and preferences will help in
bridging the digital divide.
In 2023, the total value of UPI transactions in India crossed INR
125 lakh crores annually. While exact rural contributions are not
separately published, rural areas are increasingly adopting UPI,
contributing significantly to this volume.
With over 350 million rural internet users, the value of the
digital economy, including online services like telemedicine,
digital education, and digital agriculture, can be substantial.
Although precise figures are scarce, this segment's value is
estimated in thousands of crores.
The government's DBT program has transferred billions of
rupees directly to beneficiaries' bank accounts. For instance, in
2022, DBT transfers amounted to over INR 3 lakh crores, a
significant portion of which went to rural beneficiaries,
highlighting the growing digital economy's role in rural financial
inclusion.
Opportunity for UPI
Rural India
Smartphone Usage: According to the Internet
and Mobile Association of India (IAMAI), rural
India had over 227 million smartphone users as
of 2020, and this number is steadily increasing.
Affordable Smartphones: The availability of
affordable smartphones has made it easier for
rural populations to access digital services,
including UPI.
According to a report by NPCI (National
Payments Corporation of India), rural areas
witnessed a 2.5x increase in UPI transactions
between 2019 and 2021, indicating growing
acceptance and usage.
UPI can facilitate easier disbursement and
repayment of microloans, improving access to
credit for rural entrepreneurs and farmers.
Challenges
he advancement of digital payment tools in rural India has brought about significant
changes in the financial landscape. While urban areas have been quicker to adopt digital
payments, rural India is catching up due to increased smartphone penetration and the
government's push for digitization. However, many prefer cash transactions and require
better access to financial services.
In rural India, cash is deeply ingrained in daily transactions, particularly in the agricultural
sector, which serves as the backbone of rural communities. Farmers rely on physical
money to purchase agricultural inputs, hire labor, and pay workers during harvest seasons.
In addition, cash transactions are prevalent in local markets due to the familiarity and
simplicity of using physical
1. User experience : The inability to trust relatively complex applications for an average
rural person is a challenge.
2. Language barriers : In the rural economy there is no standardized language known to
all which stops many people from using the APP.
3. Digital Literacy :Low levels of digital Literacy and lack of training leads to usage of UPI
Platforms.
Solution
User-Friendly Apps: Ensure UPI apps are
easy to use, with interfaces available in local
languages and simple navigation.
Voice- Assisted Transactions: Implement
voice commands and assistance in local
languages to help users who may have low
literacy levels.
Incentives for Merchants and Training:
Provide training to local shopkeepers and
businesses on how to use UPI, manage
transactions, and handle customer queries.
Collaborate with Financial Institutions:
Work with local banks, credit societies, and
microfinance institutions to promote UPI and
facilitate onboarding.
