Why does India have lots of digital payment apps but not in a developed country like Germany?

The premise of this question is deeply flawed.

Many countries do have digital payments apps. India is not even among the first 40 countries in the world to launch digital payments.

Germany had digital payments well before India implemented NEFT and RTGS, let alone IMPS and UPI.

When I opened my first bank account in Germany in circa 1999, the Branch Manager told me that no one used checks in Germany but hinted that, since I came from a third world country, I might not be comfortable with digital payments, and handed me five paper checks.

It so turned out that I hadn’t used a single one of those check leaves and returned them all to the bank when I closed my account in 2003.

At the time in Germany,

The leading modes of retail digital payments were

  1. Debit Card
  2. Account-to-Account payment / One-off Credit Transfer. Equivalent of NEFT and RTGS, which still hadn’t been launched in India
  3. Credit Card

The leading modes of corporate digital payments were

  1. Account-to-Account payment / One-off credit Transfer. Equivalent of NEFT and RTGS, which still hadn’t been launched in India
  2. Bulk credit transfer. Equivalent of Bulk NEFT, which still hadn’t been launched in India
  3. pCard. AFAIK, there’s still no equivalent of this in India.

These digital payments in Germany could be initiated via

  • Online banking website
  • Paper credit transfer advice with wet ink signature
  • Written instructions on company letterhead with wet ink signature.

By now,

  • The aforementioned bank digital payment apps are also supported on Mobile Banking website / app of leading banks
  • Some nonbank Digital Payment apps like Google Pay that are available in India are also available in Germany
  • Some other nonbank Digital Payment apps like Apple Pay are available in Germany but, AFAIK, they’re not available in India.

In a country with $40K per capita income, enough people can afford $2000 desktops and laptops whereas in a $3K per capita income economy, the majority of Internet access happens via cheap $100 mobile phones. Likewise, in a rich country, the average resident is not going to keep trying out every new digital app just to get cashback worth peanuts.

In keeping with that, there could a greater use of digital payment apps on desktop / laptop in Germany versus mobile phone in India; and fewer number of digital payment apps in Germany versus India.

But that does not mean, by any stretch of imagination, that Germany – and other developed countries – do not have digital payments. Anyone who makes that claim is demonstrating utter ignorance of what’s happening in the world.

For reference, USA processes as much digital payments in 15 days as India does in a year.

 · Fri

I think the question being asked is not about macro economics and how they have more transactions, but more about why we can’t be cashless in an advanced country like Germany when we can do so in most parts of India.

Ketharaman Swaminathan

 · Fri

Because cash is legal tender in Germany and cashless has little to with state of advancement of a country.

Suvrat Tembe

 · Fri

Cash is legal tender in India too. Thats not a valid reason. Going cashless is much more convenient and safe (and beneficial for the county for tax purposes), yet you can’t walk around in germany without cash.

Ketharaman Swaminathan

 · Fri

You talked about advanced country, I talked about advanced country. Cashless has nothing to do with advanced.

Moving on to convenience, that’s a separate conversation. But the conclusion is the same: Like cashless, convenience has nothing much to do with state of advancement of a country. As I highlighted in another answer Ketharaman Swaminathan’s answer to What are the biggest culture shocks people face when coming to Germany?, there are many more inconveniences in Germany, but it’s still an advanced country.

Advanced country is determined solely by per capita income, the cutoff being $13250.

That said, even 20 years ago, while credit card acceptance was poor, debit card was accepted very widely and Germany supported cashless in many areas where India still doesn’t e.g. I could jump into a train without ticket or cash and buy my ticket on the moving train with a debit card.

Now you could counter that by saying that’s not possible because India is poor country, has few trains compared to its size, has too much crowd compared to number of trains, etc. I’d totally agree but you’d finally be traipsing into areas that have something to do with the state of advancement of a country – unlike cashless and convenience.

Suvrat Tembe

 · Fri

Actually, in India, you can buy the ticket online (even for local trains) which takes no time. Climbing a train without ticket is considered as an offence in India due to the sheer number of people travelling. Nobody tried changing that by providing this service, but I would love to see it being implemented . Anyway. The reason why I replied is because I think the question is “why can’t/won’t Germany go cashless despite being a modern or advanced nation?” Maybe I am wrong. And ofc, going cashless doesn’t prove advancement, but carrying cash (or even credit cards) nowadays, at least for my generation, feels like living in 2000s or early 2010s since we have UPI. Basically, I think the question is, “why isn’t germany participating in the digital banking revolution and staying with cash dependent system”. But again, maybe I am wrong.

Ketharaman Swaminathan

 · Fri

In terms of convenience, there’s a HUGE difference between buying a ticket before boarding the train and after boarding the train. India comes nowhere near Germany even after 20 years.

Coming to your question, I disagree with your premise: As my original answer said, Germany participated in digital banking revolution at least 10 years before India started out on it.

If there’s something that Germany may not have participated in, it’s MOBILE digital banking revolution. The key word is MOBILE and that’s a device / form factor.

I can think of many reasons for that:

(1) As I mentioned in my original answer, Germany can afford to buy laptops and participate in Desktop-based Digital Banking revolution, so what’s the big deal about not participating in mobile digital banking revolution?

(2) Mobile payments like UPI work (primarily) basis mobile phone number. Indians have a very low expectation of privacy and hand out their mobile numbers to anyone who asks. Germany is arguably on the other end of spectrum in the world on privacy preferences. After selling tens of millions of euros of technology for years, it was still taboo to ask my customers for their mobile numbers. Ditto neighbors after years of living in the next apartment. So mobile-based cashless MOPs like UPI have a very low chance of working in Germany.

(3) Due to its rather unique history, Germans are extremely sensitive to government surveillance. Ergo they’re not very keen to adopt digital payments and open themselves to the state knowing about their purchase preferences.

(4) End of the day, what’s the big deal about cashless payments? UPI doesn’t multiply 1 rupee into 10 rupees. He who can’t afford to buy food in cash will go hungry even with UPI. Cashless doesn’t solve for lack of basic necessities in life.

(5) IMO, India has hyped up UPI / cashless in order to divert attention from shortages in basic necessities like food, water, electricity, sanitation, etc. Germany has no need to resort to such propaganda.