Policy Wrap: ONDC, UPI, CBDC reaches new milestones with record transactions, IT Act to accommodate new rules for AI, GenAI
ONDC records 5.5 million transactions in December 2023
December 2023 saw more than 5.5 million transactions through the Open Network for Digital Commerce (ONDC), the most in a single month since the platform's inception.
In January 2023, ONDC had 2,000 orders.
Of the total transactions in December 2023, 3.4 million (63%) were in the mobility category while 2 million (37%) were in the retail category.
Food and beverages category made up 32.5% of orders in the retail segment, followed by fashion (29.6%). The remaining transactions were divided among other categories, including groceries (10.1%), electronics (5.7%), home and kitchen (12.6%), beauty and personal care (8.5%), and groceries (10.1%). The biggest single-day orders that ONDC has ever received were roughly 217,000.
By the end of March 2024, the network hopes to have facilitated 6.5 million to 7 million transactions.
By the end of the year, ONDC targets to have up to 8 million monthly transactions. A peak of over 95,000 retail orders in a single day has already been observed.
The network also aims to reach a gross merchandise value of $48 billion and increase the e-commerce penetration in the country by 25% during the next two years. There are currently roughly 40,000 sellers on the network, distributed throughout 200 cities.
UPI transactions crossed 100-billion mark in 2023, marking an overall 50% increase from 2022
According to data from the National Payments Corporation of India (NPCI), the total number of transactions performed through the Unified Payments Interface (UPI) surpassed the 100 billion last year, marking a new milestone.
In 2023, UPI processed 117.6 billion transactions in total. Additionally, data indicated that previous year, the UPI rails processed a little over Rs 182 lakh crore in total value across the payments infrastructure.
In December 2023, the number of UPI transactions in the nation reached 12.02 billion, with the payments worth Rs 18.23 lakh crore being processed by the service. This indicated an annual 54% increase in volume and a 42% increase in transaction value.
This growth demonstrates the remarkable expansion of the nation's UPI payments service, which had around 74 billion transactions in 2022 and 38.7 billion in 2021.
Furthermore, according to NPCI’s data, there was a 49% increase in monthly UPI transactions from January to December of last year.
The National Payments Corporation of India (NPCI)'s recurring payment mechanism, known as UPI Autopay, has been gaining traction as well. It is mostly used throughout the nation for bill and subscription payments.
The growing amount of use cases that UPI Autopay may be applied to, could potentially be the reason for its growing popularity. This includes paying national credit card bills, insurance premiums, and mutual fund bills.
Additionally, the UPI Autopay feature has grown in terms of volume and value as a result of the recent changes to transaction limits, which were raised from Rs 15,000 to Rs 1 lakh.
Government of India may amend IT Act to accommodate new rules for AI, GenAI models
The Government of India is anticipated to revise the Information Technology (IT) Rules, 2021, and enact regulations governing generative AI models and artificial intelligence (AI) businesses.
It is anticipated that the revisions will require platforms that train their machines using artificial intelligence algorithms or language models to ensure that they are free from any type of "bias."
The Ministry of Electronics and Information Technology (MeitY), Government of India, is expected to announce the revisions soon. They require that AI algorithms and language models that are trained on datasets that contain prejudices or that have biases built into them be prohibited from being released for public use.
As mentioned by a high ranking government official, the parameters that now define bias include, but are not limited to, caste, religion, community, and national security. Platforms will be required by law to make sure that all of these guidelines are followed, broadening the scope of online safety and trust.
In order to assure safety, they will consult on parameters other than the ones that are currently known and understood to minimise prejudice. Another official stated that before the product is released into the market, these AI models must go through stress and sandbox testing to make sure that such biases are absent.
The IT Rules revisions may introduce new regulations around deepfake and synthetic content, in addition to providing safeguards against bias in AI and language models and clear guidelines for platforms on loan apps.
The decision of the GoI to amend the IT Act, 2021, to include such provisions, could be due to the fact that the Digital India Bill, which was supposed to have provisions that seek to empower users to seek algorithmic accountability from internet intermediaries and social media companies, is still some time away from being finalised. The fact that developments around generative AI is developing rapidly, cannot be ignored.
CBDC payments hit RBI goal of 1 million transactions in a day
On December 27, 2023, the number of central bank digital currency transactions surpassed one million for the first time, and it has since peaked at more than 2 million a day.
Although the e-rupee initiative, or CBDC, is still in the experimental stage, the RBI had set a goal of a million transactions per day for 2023, which they managed to achieve.
Prior to starting the retail e-rupee pilot, the RBI had started with wholesale CBDC in the government securities market and had recently expanded it to the call money market.
There is no timeframe for finishing the pilot, according to Governor Shaktikanta Das and his deputies, and the trial's learnings would be incorporated into the final design.
The use of digital payments through UPI and other tools has increased rapidly in India since the high currency notes were demonetised in November 2016. The RBI is attempting to position e-rupee as an additional payment option in response to users' inquiries about the necessity of switching from the current electronic payment options to CBDC.
The e-rupee has been used by a few state-run banks to distribute employee benefits in recent weeks, which has contributed to an increase in transaction volume.
With a small group of clients, RBI had collaborated with SBI and IDFC First Bank initially, which was introduced in December 2022. Other banks were brought in after things settled, and as more customers were brought in, banks started to provide trial access more liberally.