All the developed economies started moving towards a cashless economy at the beginning of the 21st century. With India becoming an economic powerhouse, it has set a vision to become a cardless economy by 2020, as confirmed by NITI AAYOG, a government of India initiative.

India has always been a cash-rich economy, and card usage began to pick up towards the end of 2012 after the launch of India's first domestic payment network, RuPay, by the National Payments Corporation of India.

Though RuPay started late, it has emerged as the fastest-growing payment brand in the world, reaching 200 million cardholders by the end of 2016. RuPay has achieved about 38% of the debit card market share.

RuPay's rapid growth was driven in part by the Pradhan Mantri Jan Dhan Yojana scheme, which brought millions of previously unbanked Indians into the formal banking system with zero-balance accounts linked to RuPay debit cards.

The scale of that rollout gave RuPay a distribution advantage that no international network could easily match in the domestic market, and it laid the groundwork for EMV adoption.

In India, EMV picked up after RuPay launched its first EMV card with international acceptance towards the end of 2012. All banks in India began replacing old magnetic stripe cards with EMV cards after the RBI mandated that all cards be EMV-compliant by September 2015.

The migration to EMV had its own challenges.

Acquiring banks had to manage the logistics of reissuing hundreds of millions of cards and upgrade terminal infrastructure to accept chip transactions. Also, they had to navigate the certification processes required to bring EMV terminals to market across multiple payment networks simultaneously.

By the time EMV cards reached most cardholders in India, NPCI and the Government of India introduced Aadhaar-based biometric payments.

The Aadhaar-enabled Payment System (AePS) allowed customers to transact at micro-ATMs using only their biometric authentication, without a card. For a country with a large rural population and a patchy card acceptance infrastructure, AePS offered a path to financial inclusion that bypassed the card ecosystem entirely.

Just after that, NPCI revolutionized the Indian payments space with the introduction of the Unified Payments Interface (UPI) in 2016, enabling cardless transactions via mobile devices.  

UPI's interoperability across banks, its zero-cost model for consumers, and its tight integration with mobile apps made it an immediate success. By 2018, UPI was processing hundreds of millions of transactions monthly, and its growth trajectory showed no signs of slowing.

At the end of 2016, demonetization by the Government of India boosted cashless transactions, prompting people to switch to card and UPI payments.

The sudden removal of high-denomination currency notes from circulation led to a large section of the population exploring digital payment options for the first time. While the transition was difficult in the short term, it accelerated digital payment adoption in a way that years of gradual promotion had not.

At this juncture, with many payment options available in India, UPI, Card, IMPS, *99#, the user base is divided across them.

With the Government actively promoting UPI, it has been tough going for EMV in the Indian market. The infrastructure investment required to deploy and certify EMV-compliant terminals, combined with the rapid adoption of QR-code-based UPI payments that require no terminal at all, has made it harder for EMV to maintain the momentum it built between 2012 and 2016.

Now the future for EMV in India lies in the transit space with a contactless Tap and Go system, which remains largely untouched, and the Host Card Emulation (HCE) system, with increasing mobile phone usage.

As NPCI develops its own dual-interface cards with Tap and Go capabilities, and various state metro railway ticketing systems consider open-loop EMV implementations, EMV is poised for a new surge in usage.

How India, with its huge population, manages to implement open-loop EMV for the transport ticketing system is something the whole payment world is watching closely.

The transit opportunity is worth examining in more detail. Metro rail systems in cities like Delhi, Mumbai, Bengaluru, and Chennai collectively serve millions of daily commuters.

A closed-loop ticketing system requires commuters to carry a separate transit card or token. An open-loop EMV contactless system would allow any compliant debit or credit card, or a mobile wallet using HCE, to tap in and out at fare gates, removing the need for a separate transit card entirely.

The certification and interoperability requirements for open-loop transit are complex, but the convenience benefit for commuters is straightforward and real.

If the transit implementation becomes successful, EMV will make a big comeback in the Indian market, challenging non-EMV transaction infrastructure across multiple sectors.

A look back from 2019

Writing in April 2019, the trajectory of payments in India suggested a market where EMV's future would hinge on its ability to find use cases that UPI and other cardless payment methods could not easily serve. Transit was the most compelling of those use cases, and it remains so today.

The years after that have confirmed much of what was predicted earlier.

UPI has continued its extraordinary growth, making it India's most used retail payment method. EMV, meanwhile, has continued to play an important role in card-present and international transaction contexts, where the security and interoperability guarantees of the EMV standard remain relevant and necessary.

The open-loop transit question is still being worked through across different Indian cities and transport networks, with varying degrees of progress.

The infrastructure, certification, and commercial challenges involved are considerable, but the direction of travel is clear. EMV contactless in transit represents one of the most meaningful opportunities for the standard to expand its footprint in a market that has otherwise leaned heavily toward UPI.

The Indian payments market doesn't have a single path. EMV and UPI are not mutually exclusive. They serve different transaction contexts, user needs, and infrastructure realities.

The question for the years ahead is not which one wins, but how both continue to evolve in a market that has consistently surprised the rest of the world with the speed and scale of its payment innovation.