EVALUATING THE ROLE OF PUBLIC POLICY IN THE GROWTH AND ADOPTION OF DIGITAL PAYMENT SYSTEMS IN INDIA

The digital payment system in India has experienced a rapid increase in the past decade, largely because of government policies and technological advancements. Policy initiatives taken by the Government of India and Reserve Bank of India (RBI) have boosted the growth of digital payment systems by enhancing digital payment infrastructure, enabling regulatory framework, creating institutional and technological ecosystems. At the same time, the Digital payment system is reducing the transaction costs, providing faster transactions, increasing convenience and accessibility. In this context, the present study examines the role of government initiatives and policies in facilitating the use of digital payment systems in India, particularly in RTGS (Credit Transfers), AePS (Fund Transfers), IMPS, UPI, and Mobile Payments (mobile app-based).
This study has three objectives: first, to examine the growth trends of digital payment systems in India. Second, to analyse the role of public policy interventions and government initiatives. Third, to identify key challenges and policy gaps affecting the sustainable growth of digital payments. The study is based on secondary data and primary data. Secondary data is collected from the published sources such as Reserve Bank of India, National Payments Corporation of India, NITI Aayog and Periodic Labour Force Survey (PLFS). Primary data were collected from 100 respondents through a structured Google Forms questionnaire to understand users' perspectives on digital payment systems. A descriptive statistics method was employed to analyse the trend volume and transactions of selected digital payment systems.

The study discusses the significant government initiatives to enhance the digital payment infrastructure and facilitate financial inclusion. The results show a significant rise in retail digital payments, particularly through UPI and mobile-based systems. This indicates that policies focusing on interoperability, low transaction costs, and ease of use have been successful. This study also found that, infrastructure and connectivity constraints and cybersecurity and fraud risks are the major challenges policy gaps which are affecting growth of digital payment systems. The paper concludes that government support and effective regulatory policies have been instrumental in accelerating the adoption of a digital payment system.

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