Which Fintech sector is hoping for a digital infrastructure push?

In recent years, there has been a technological advancement in the way Indians pay. Digital payment transactions have increased steadily over the past few years.

The key enabler at the center of India’s transformed digital payments landscape is the JAM Trinity – Jan Dhan, Aadhaar and Mobile.

Pradhan Mantri Jan-Dhan Yojana (PMJDY) is one of the largest financial inclusion initiatives in the world, launched in August 2014, to provide universal banking services to every unbanked household.

One of the main objectives of Digital India is to achieve ‘faceless, paperless, cashless’ status. Promotion of digital payments has been given top priority by the government to bring each and every segment of the country under the formal fold of digital payment services.

The financial technology (fintech) industry hopes to get further pressure from the 2023 budget to move forward and grow the network of digital payments.

Suresh Rajagopalan, CEO, Wibmo (A PayU Company), said Budget 2023 would provide incentives for MSMEs to adopt digital payments in tier 3 cities and beyond.

“We expect further digital infrastructure push from the government to make India a cashless economy,” urged Rajagopalan.

Budget 2023 expectations LIVE News updates: Expansion of affordable housing on home buyers’ wish list

Rajagopalan added that the government should give further push to adopt prepaid instruments to reach out to the economically underserved and the underbanked.

Akash Sinha, Co-Founder and CEO, Cashfree Payments highlighted that the regulations laid by the RBI for the Indian fintech ecosystem have made India one of the most favorable markets for fintech organizations worldwide.

The budget is of great importance as the Indian fintech ecosystem is on the way to expansion, both domestically and internationally.

“More offline digital payment products, such as UPI 123 and UPI Lite, should be introduced to help digital penetration in semi-urban and rural regions of India. Offline digital products provide immense relief to consumers in these areas who face traditional barriers to entry, such as lack of reliable infrastructure and slower devices,” urged Sinha.

Sinha also urged that the budget should also focus on increasing the acceptance of home-grown payment solutions in more geographies, and increasing cross-border transactions.

Grow MSMEs by promoting the use of digital infrastructure, urged Sinha, adding that while India’s MSME sector is huge and plays a significant role in the country’s GDP, an impediment to this sector’s long-term development is its inability to embrace the the right technology solutions.

“Access to digital banking, lending, collections and other fintech products can transform the MSME sector, provide additional important employment opportunities and increase this sector’s contribution to India’s GDP,” Sinha said.

Vineet Singh, co-founder and CEO of Castler emphasized that India has wholeheartedly embraced digital payments and as it pushes for a cashless economy, there is a need to promote services that can help build a secure digital transaction ecosystem.

“One such service that needs attention in the upcoming budget is Digital Escrow which can play a pivotal role in building trust in digital payments for various use cases,” Singh added.

Singh expects the union’s budget to bring measures to ease the financial burden on startups, such as reducing non-GST taxes up to Rs 10 crore turnover annually and introducing greater tax relief for depreciation of fixed assets, reducing angel tax to promote seed stage investments and abolishing double taxation on ESOPs.

Rajagopalan also expects the government to actively promote digital banks and build a digital banking regime, helping fintech players to offer their technology platforms to build optimal credit products and offer best-in-class customer experience.

With the rise in digital payments, payment fraud has also expanded at a rapid pace. Experts suggested that the budget should include regulations that will curb the threat of digital fraud, including mandatory use of fraud management solutions.

The budget for the financial year 2023-24 will be presented on 1 February 2023 by Finance Minister Nirmala Sitharaman.

Read all the latest business news here