Innovations in payment systems to drive financial inclusion: EY

NEW DELHI: Innovations in payment systems hold key to accelerating implementation of financial inclusion agenda, with payments worth over Rs 8,74,300 crore expected to be made through prepaid instruments in the coming years, says a report.

A report by global consultancy EY today said disruptive game changing innovations in the payment systems would be critical to accelerate financial inclusion agenda of India.

Even though prepaid instruments represented only 3.62 per cent of the Indian card market, EY said it would increase dramatically over the next decade.

"Market growth in pre-paid instruments' will also emanate from the proliferation of m-wallets, money transfer and other new applications of the product.

"... these new segments are expected to collectively contribute 47 per cent of the prepaid market in FY'20.

"Over Rs 8,743 billion in payments is likely to be made through pre-paid instruments in FY 2020. This will be more than 12 times the volumes in FY 2013," it said.

The report focuses on India's financial inclusion agenda, the growth drivers for its success and the supporting infrastructure required for the same.

According to the report, with current trends like growing urbanisation, rising middle class and aspirations, this is the right time to tap the large unbanked population of India.

EY Partner Advisory ( Financial Services) Mahesh Makhija said India is an exceptional country with unique consumer needs.

"To accelerate financial inclusion in India, we will need to understand what combination of payment products and services will work in the Indian context. Innovations in payment systems will occur at the intersection of different industries like financial services, telecom and retail," he added.