5 Innovative Digital Payment Systems Revolutionising the Retail Experience

“One of India’s success stories is digital infrastructure. UPI enables everybody to make transactions in seconds. Millions of Indians use it,” said the German Federal Minister for Digital and Transport, Mr. Wissing, on August 19, 2023, after experiencing the simplicity of UPI payments firsthand for purchasing vegetables in Bengaluru.

While the fascination with UPI is understandable, the Indian digital payment stack offers many more innovative solutions. In the rapidly evolving world of retail, offering a seamless and convenient customer experience is essential for success. Today’s consumers demand more than just quality products; they seek efficiency, security, flexibility, and privacy in every part of their shopping journey—including payment.

A PwC report projects a threefold increase in digital payment transaction volumes by FY 2028-29. UPI leads this growth and is expected to reach 439 billion transactions by FY 2028-29. India accounts for nearly half of the world’s digital payments, holding a 48.5 per cent share in the global real-time payments volume, a report from the Reserve Bank of India (RBI) said on 5 August 2024.

In India, digital payment adoption is growing exponentially, driven by government initiatives like Digital India and a tech-savvy population. The demand for innovative payment systems from banks and payment aggregators that cater to retailers/merchants and their customers is higher than ever.

Let’s explore five cutting-edge digital payment systems that are transforming the retail experience in India.

1. Tap-and-Pay: The NFC Way

Near-field communication (NFC) is reshaping how consumers pay for store products. With a simple tap of their smartphone or contactless card or a wearable like a ring or watch, customers can complete transactions quickly and securely. The post-pandemic shift towards contactless payments has only accelerated NFC adoption. The urban Indian consumers preferred NFC-based payments due to their speed and safety.

For retailers/ merchants, NFC means faster checkouts and reduced operational costs, as there’s no need for customers to handle cash or even swipe cards. 2025 promises to be a year where NFC payments through wearables like watches or rings are going to be a dominant trend, as the industry is already ready with a sleuth of wearable product launches. Unified Payment Devices support NFC-based transactions too, making it easy for retailers/merchants to integrate this seamless technology into their systems, thereby enhancing the customer experience.

2. Scan and Go: The Power of Dynamic QR Codes

QR codes, especially when integrated with the Unified Payments Interface (UPI), are a game-changer for Indian retail. A PwC India report forecasts a threefold increase in UPI transactions by 2028-29, representing 91% of all retail digital transactions. All a customer needs to do is scan the code, enter the amount, and authenticate the payment. This fast, cashless solution is particularly effective in low-infrastructure environments. The advent of all-in-one devices that work as POS (Point of Sale) machines with dynamic QR Codes, will further penetrate this trend in 2025. Retailers benefit from a hassle-free payment process, while customers enjoy secure, real-time payments.

At the same time, merchant apps offered by many payment service providers are helping retailers and merchants accept payments, get value added services and have a clear visibility into their payments. Dynamic QR code generation for each transaction by retailers, especially restaurants, has further improved speed and customer satisfaction.

3. Buy Now, Pay Later (BNPL): Flexibility at its Best

One of the fastest-growing payment methods, especially among younger consumers, is Buy Now, Pay Later (BNPL). This system doesn’t just allow customers to purchase items without paying the full amount upfront but also empowers non or new customers of banks. Offering flexible, interest-free installments, or no-cost EMIs as they are popularly called, BNPL is becoming a popular choice for high-ticket items like electronics and fashion. According to Redseer Strategy Consultants, the Buy Now Pay Later (BNPL) market in India is expected to reach $40 billion by 2025.

Retailers/merchants leveraging BNPL solutions report a boost in both sales and customer retention, as this payment method appeals to budget-conscious consumers. BNPL enhances the customer experience by offering more financial flexibility, thereby encouraging higher-value purchases.

4. Voice-Activated Payments: Speak and Complete

Voice-activated payments are an emerging trend that is simplifying the retail experience. With technologies like Google Assistant, Amazon Alexa, and Apple Siri, users can now complete transactions using voice commands. The global voice-based payments market size is expected to reach USD 14.66 billion by 2030, expanding at a CAGR of 10.9% from 2022 to 2030, according to a new study conducted by Grand View Research, Inc.

Voice-activated Payment is going to be a bigger revolution in India, with NPCI’s UPI123 and RBI’s push for financial inclusion, especially that of visually challenged or of people who can’t understand English. Multi-lingual voice-activated payments will be a game changer in a country like India. For retail businesses, incorporating voice payments allows them to cater to consumers seeking a more hands-free, personalised shopping experience. This new-age technology further enhances customer loyalty and ensures smoother, quicker payments, particularly in sectors like food delivery and quick-service retail.

5. Biometric Payments: Fingerprints of the Future

Biometric payments, which utilise fingerprint or facial recognition technology, are gaining momentum, particularly in India, where Aadhaar-enabled Payment Services (AEPS) already link biometric data to banking systems. This payment method ensures security and reduces fraud by eliminating the need for passwords or PINs, due to which the trust of the unbanked population too increases in digital payments and eases the path of financial inclusion. For retailers, biometric payments mean more secure, efficient transactions, especially in high-value retail segments, ensuring they are prepared for the next big shift in digital payments.

Embrace the Future of Retail Payments

The future of retail payments in India is rapidly evolving, with innovative systems providing faster, safer, and more flexible options for both consumers and retailers. From contactless NFC payments to biometric security, embracing these advancements will be key to staying competitive in the retail market.

How Hitachi Payment Services Can Help Retailers and Merchants

Hitachi Payment Services is at the forefront of delivering cutting-edge digital payment solutions to revolutionise the retail experience in India. From unified payment devices that support NFC and QR codes to biometric payments and merchant apps that simplify transaction management, we offer comprehensive solutions to banks and fintech’s that are tailored to the unique needs of their retailers and merchants.

Our UPI solutions ensure secure, real-time payments, while our value-added services enhance the overall efficiency of merchant’s business by integrating the latest payment technologies.

As Michael Jordan famously said, “Some people want it to happen, some wish it would happen, others make it happen.” Retailers/merchants who embrace these cutting-edge payment systems for retail will be the ones who “make it happen,” leading the charge in transforming the customer experience and shaping the future of shopping.

Key Takeaways from this article:

NFC payments offer a faster, touch-free shopping experience, ideal for today’s customers.
QR codes, powered by UPI, are transforming low-infrastructure retail environments with real-time, cashless transactions.
BNPL (Buy Now, Pay Later) is giving customers the financial flexibility to make larger purchases without upfront payments.
Voice-activated payments are emerging as a futuristic, hands-free option for tech-savvy consumers.
Biometric payments provide the highest levels of security and efficiency, reducing fraud risks.

By partnering with Hitachi Payment Services, banks and fintechs can seamlessly offer these innovative solutions to their merchants and help them stay ahead in the ever-changing retail landscape in India.

References:

5 Innovative Digital Payment Systems Revolutionising the Retail Experience

5 Innovative Digital Payment Systems Revolutionising the Retail Experience

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