Domestic Remittances Support Growth Of Digital India
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How Domestic Remittance Is Picking Up Speed In India

Updated on February 02, 2021 12:00 am

Domestic remittance transfers are predominantly migrant workers sending money from big metro Indian cities and industrial hubs to rural areas for sustenance. Yearly remittances within India amounts to roughly Rs 2 lakh crore.

The COVID-19 pandemic and the nation-wide lockdown last year plummeted the remittance flow by over 90% in the first half of the year, triggered by sudden job loss and the migrants returning to their home state.

Data from the National Payments Corporation of India (NPCI) showed that a total of 181 million transactions took place in March 2020 (worth Rs 10,700) on the Aadhaar-Enabled Payment System (AePS) which is 11% lower in value and an 18% decline in volumes since February.

However, the domestic remittances picked up on the AePS when the stimulus from the Prime Minister Garib Kalyan Yojana (Prime Minister's Poor Welfare Scheme) came in and people had money to send to their loved ones.

AePS is basically a type of payment system that allows interoperable financial transactions at Point of Sale/Micro ATM via the Business Correspondent(BC)/ Bank Mitra of any bank through Aadhaar-based authentication. The AePS system has been implemented to empower various sections of the society by giving access to financial and banking services through Aadhaar.

By September 2020, the domestic money transfers revived and increased between 70-80% of pre-COVID-19 levels. By this time, lockdown had eased and people were going back to their jobs in the cities.

Agents providing payment facilities in small towns noticed a sudden spike in airline ticket bookings.

The unprecedented surge in airline booking may be due to the low frequency of inter-state trains. Also due to employees being called back to their work urgently as businesses reopen. In absence of other modes of travel, many people are booking flights just in case.

Remittances are expected to gradually increase as the economic situation comes back to normal albeit slowly. 

Digital India and Financial Inclusion Campaign

India's internet user base has grown exponentially in recent years thanks to the increasing availability of affordable smartphones and high-speed internet connectivity and it is now one of the world's largest internet user base with 1.17 billion mobile subscribers as of last year.

Perhaps this is why India is reportedly the second-highest in Fintech adoption rate in the world at 52%, only after China.

India's digital payment sector is currently worth $200 billion and is expected to grow five-fold to $1 trillion by 2023 according to Credit Suisse.

The Indian government is simultaneously working with Fintech companies to enhance penetration and acceptance of digital modes of payment even in the remotest areas with initiatives such as Pradhan Mantri Jan Dhan Yojana (a financial inclusion program of the Government of India), Aadhaar and Unified Payments Interface (UPI) by leveraging the increasing presence of smartphones and internet.

In fact, in December 2020, UPI recorded 2.23 billion transactions that are worth Rs 4.16 trillion. With UPI, a real-time payment system developed by the National Payments Corporation of India (NPCI), there has been a substantial reduction in the cost of infrastructure for Fintech ventures.

Send Money in India with WhatsApp UPI-based Payments

People across India can now send and receive through WhatsApp at zero cost, thanks to WhatsApp Payment, a payment feature that allows users to send money to anyone from their WhatsApp contact list.

Launched in November 2020, WhatsApp payment is designed on the NPCI's UPI system enabling transactions with over 160 supported banks including leading banks like the State Bank of India (SBI), ICICI, HDFC, and Axis Bank.

Through the WhatsApp In-Chat Payment feature, users can transfer money in the same way as sending a message on the platform. The UPI interface allows users to make instant transfers between sender and receiver bank account via Virtual Payment Address (VPA) that eliminates the need to provide a bank account and IFSC code. The transfer process is safe, secure, easy, and available 24/7, 365 days.

Abhijit Bose, Head of WhatsApp, India added that UPI is a transformative service and the company is delighted to be part of India's campaign to increase the use of digital payments and help expand financial inclusion in the country.

In addition to other popular digital payment apps like Google Pay, PhonePe, Paytm, the recent payment feature in Whatsapp will boost the adoption of digital payments, especially since the messaging app has more than 300 million users in India, WhatsApp's largest market.

DakPay: India's New Digital Payment App


The Department of Posts (DoP) and India Post Payment Bank (IPPB) have unveiled new digital payment services with the launch of a new digital payment app 'DakPay' as part of its ongoing efforts to provide Digital Financial inclusion at the last mile across India.

DakPay is a suite of digital financial and assisted banking services offered by India Post & IPPB through its Postal network (Dak) across the country to cater to the financial needs ('Pay') of different sections of the society.

DakPay Services:

  • Send money to your loved ones (Domestic Money Transfers-DMT)
  • Scan QR code and make digital payment for services/merchants via Virtual Debit card & with UPI
  • Enabling cashless ecosystem through biometrics
  • Provide interoperable banking services to the customers of ANY BANK (AePS: Aadhaar-Enabled Payment System)
  • Utility Bill Payment services

The DakPay app allows you to make instant money transfers with UPI and also make payments at your favorite online stores and shopping outlets like Big Bazaar, KFC, BATA, Pantaloons, etc. All you need to do is link your bank account on DakPay and transfer money using the BHIM UPI. It is a safe, secure and reliable payment app, where you can also meet your banking needs. You can check your account balance, add your beneficiaries and manage multiple bank accounts across over 140 banks.

DakPay Banks

The new digital payment system brings simplified payment solutions to customers by giving access to banking and payment services and also offers assisted mode with the help of the trusted Postman.

As the Secretary (Posts) & Chairman, IPPB Board put it, 'DakPay' is truly an Indian solution designed to address the financial needs of every Indian.The launch of DakPay adds up to the legacy of India Post, which is reaching out to every household.

He also added that the innovative service is a unique concept where one can order and avail of postal financial services at doorsteps on top of having access to banking services and postal products online.

Send Money to India from Abroad with Xoom's UPI Payments

PayPal's Xoom has integrated NPCI's UPI to its platform enabling Indian diaspora in countries like the U.S., Canada, and Europe to send money to India in an instant.

Xoom customers can now send to 66 banks across India with the UPI payment method without the need to enter bank details like IFSC code or beneficiary account number.

This option is a hassle-free method to transfer money requiring only the recipient's UPI ID or VPA.

India has been the top recipient of remittance for the past consecutive years and it is no surprise that Xoom, a pioneer in digital money transfer, views India as an important remittance corridor.

The UPI integration is a significant step towards providing a seamless and reliable money transfer option for the Non-resident Indians (NRIs) who are sending remittances to their families in India.


It is well known that when it comes to cross-border money transfers, especially sending money to developing countries, digital remittance solutions are the preferred choice for expats due to better exchange rates, lower upfront fees, reliable and easy process.

There has been an increasing interest in providing digital remittance services to underbanked/unbanked communities in the country.

The AePS is central to domestic remittance transfers for millions of migrants. The payment system is used by more than a million business correspondent agents at micro-ATM points all over the country to enable Jan Dhan account holders to withdraw cash.

Real-time payments via UPI also became the popular and essential payment method during the pandemic in the country.

Thankfully, the growing fintech solutions merged with the network of ATMs and bank branches can provide convenient access to people, thus driving financial inclusion.

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