India’s massive economy has historically been dominated by cash, but the tides are beginning to change as the government leads the way in pushing the world’s second-largest population away from physical currency. A late 2016 demonetization initiative, in which the government removed 86% of the country’s currency from circulation, was the major impetus behind a rapid uptick in digital payments, which are expected to grow at least fivefold to $1 trillion by 2023. But cash still reigns supreme in the market — physical currency comprises 70% of the country’s total transactions by value — and digital wallets have a long runway for growth, with just 14% of Indian consumers making mobile payments on a weekly basis. However, the growing digital payments opportunity, increase in internet access, and a series of government-backed initiatives that expand access to financial services are helping homegrown players expand rapidly and bringing major multinational firms to the region, putting the market still at the beginning of a stretch of ongoing rapid growth and innovation in digital payments.
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