The Digital Revolution in India: Sari Stores and Street Vendors Embracing E-payments

Indian weddings are known for their elaborate nature, often involving multiple outfit changes over several days of celebrations.

In the past, it was common for families to visit Brij Kishore Agarwal’s sari shop located near the narrow lanes of Chandni Chowk market in India’s Old Delhi. Customers would typically leave with a large bundle of vibrant, embroidered garments and often spend a significant amount of money during their visit.

Worries about someone breaking in and stealing the money used to keep the 79-year-old store owner awake at night. These days, he can sleep better knowing that almost all of his customers use e-payments for their purchases.

Agarwal, who has been working in the shop for approximately 65 years, reflects on the changes he has witnessed in the country. He mentions that cash payments are now a rare occurrence.

Digital payments, facilitated by platforms such as the Unified Payments Interface (UPI), have gained widespread popularity in the country. This system enables users to transfer funds instantly by scanning a QR code, revolutionizing the way people conduct daily transactions.

In Delhi, vendors selling tea and tuk tuk drivers buying parathas stuffed with hot paneer are now using mobile apps to collect and make payments, making transactions quick and convenient.

This e-payment trend is expected to have a significant impact on India's goal of becoming an economic powerhouse. As the world's fifth largest economy, Prime Minister Narendra Modi aims to elevate India to a "developed" status by 2047, emphasizing the importance of embracing digital payment systems.

"According to Eswar Prasad, an economics professor at Cornell University, digital payments have the potential to boost India's growth. By eliminating frictions, increasing efficiency, and reducing costs, this shift towards digital transactions could have a significant impact on the economy."

Brij Kishore Agarwal's sari shop in Old Delhi

Sania Farooqui/CNN

Digital India

India’s push to digitize its society started about 15 years ago, but e-payments were slow to catch on. In 2016, 96% of transactions in India were still conducted with banknotes.

Two significant events occurred that year that brought about changes. The first event was the launch of the payment infrastructure UPI by the non-profit National Payments Corporation of India (NPCI). This initiative, supported by the central bank and a banking association, revolutionized the way payments were made.

With UPI, users can now use their phones as virtual debit cards, enabling them to transfer money instantly from nearly 600 member banks and fintech companies. The best part is that users can make these transactions without having to enter their bank details or worry about paying any transaction fees.

QR codes line the awning of Ramesh Kumar's towel shop at Sarojini Nagar Market in Delhi.

In the same year, the government made a sudden decision to eliminate two major banknotes that made up 86% of all currency in circulation. The reason given was to combat corruption. This move led to a significant increase in the adoption of e-payments.

Ramesh Kumar, a 52-year-old towel shop owner in Delhi's Sarojini Nagar Market, shares that he began accepting digital payments in 2016 because he felt it was necessary.

The Covid-19 pandemic has accelerated the use of digital transactions even more, as individuals sought to minimize physical contact and reduce the spread of the virus.

Indians now rely on UPI for payments, whether it's for buying vegetables or settling bills with doctors. The government reports that India leads in digital transactions compared to other countries. In 2023, the number of UPI transactions exceeded 100 billion.

However, there are still some who have reservations. Azeez, a 34-year-old rickshaw driver in Old Delhi, shared with CNN that he is hesitant to use e-payments due to fear of potential financial losses.

“I am [an] uneducated person, I am poor, I have never been to a school, I can’t read or write,” he says. “What if I make a mistake?”

Rickshaw driver Azeez accepts only cash.

Sania Farooqui/CNN

The upward trend is projected to persist, leading to an increase in both the quantity and worth of funds entering the formal economy. UPI has set a goal of achieving two billion transactions daily by 2030.

Agarwal, the sari seller, expresses confidence in the ability of both herself and her longstanding store to evolve and adapt. She believes that every buyer and customer can also undergo similar changes.

India is experiencing rapid economic growth and digitization has played a significant role in this success. According to Prasad, the author of “The Future of Money: How the Digital Revolution Is Transforming Currencies and Finance,” digitization has greatly contributed to India's impressive economic trajectory.

Although it's hard to measure the exact impact of UPI adoption on India's GDP, on a smaller scale, we can easily see the positive changes it brings. Agarwal shared that it has improved efficiency and transparency in his business operations, as well as simplified the process of filing taxes.

Kapil Sharma, a 42-year-old flower seller outside a temple in Old Delhi, used to lose customers because they didn't want to wait for change. Since starting to use UPI about a year ago, he has noticed an increase in sales.

“It’s just simpler,” he says. “They buy, pay and go.”

Flower seller Kapil Sharma offers a QR code for customers.

Sania Farooqui/CNN

India's digital public infrastructure has played a crucial role in achieving an 80% financial inclusion rate. Despite existing inequality issues, digitization has empowered Indian citizens, regardless of wealth, to feel connected to India's economic progress.

NPCI is now concentrating on international expansion to facilitate remittance transfers for overseas workers and enable Indian travelers to make payments using UPI. Recently, the Eiffel Tower's website has also adopted UPI as a payment method.

Prasad believes that the government views the UPI as a model for other countries and thinks it will enhance India's global reputation.

The UPI seems to have solid backing from grassroots users in India, indicating that its influence in the country will continue to expand.

“If anyone gives me an option to go back to cash payment, I will just say I am not interested,” says Agarwal. “Please find a phone, download these apps, and use them.”

Editor's P/S:

The article provides a comprehensive overview of the growing adoption of digital payments in India, particularly through the Unified Payments Interface (UPI). It highlights the significant shift away from traditional cash-based transactions and the positive impact on the country's economic growth and financial inclusion. The widespread use of UPI has revolutionized the way Indians conduct financial transactions, making them more efficient, convenient, and secure. The article also acknowledges the challenges faced by some, especially those who lack digital literacy. However, it emphasizes the potential for UPI to continue expanding and empowering individuals across the country.

The article effectively captures the transformative impact of digital payments on Indian society. It showcases the experiences of various individuals and businesses who have embraced UPI and highlights the benefits they have experienced. By reducing friction and increasing efficiency, digital payments have contributed to India's economic growth and improved financial inclusion. The article also touches upon the role of the government and the National Payments Corporation of India (NPCI) in driving this digital transformation. Overall, the article provides valuable insights into the evolving landscape of payments in India and its potential implications for the country's economic development.