The Palimpsest Economy: Imagining the future of payments in India (2025–2035)
“None of us know what the future is going to be.” - Alex Chriss, President & CEO, PayPal
When I was 8 years old, my father would take me to a Standard Chartered Bank branch in Mumbai on the first Saturday of each month. Of course, I went because they had a lovely playground, but meanwhile, my father would withdraw money for all bill payments due in that month, send remittances to grandparents, and have long discussions with bank staff on “new investment products” in the market. And I got hours to play.
Fast forward to now, the ATM growth rate in India is steadily declining (as shown below). Many of us don’t even feel the necessity to carry cash before stepping out. And cheques have limited usage in the peer-to-peer payments space.
In the past 3 decades, our payments landscape has changed and digitized so rapidly that even a five-year-old knows about the wonders of UPI.
But India’s payments story was not a linear march from cash to code. It has been a palimpsest - a manuscript written and rewritten over time, where older layers remain visible even as new ones emerge.
In one layer, younger generations are moving away from ATMs toward stablecoins, programmable money, and AI-native commerce. In another, incumbent instruments such as debit cards, credit cards, and the old, reliable friend called cash continue to play a meaningful role, particularly for certain user groups. At the same time, there is an India that is only now warming up to the advanced capabilities of UPI, such as recurring mandates, credit line on UPI, mutual fund investments, EMIs, and online bill payments.
These worlds coexist.
But if we pause and look ahead to 2035 - a deeper question arises:
What will “paying” even look like in a world where intelligence, identity, and money are natively digital?
From Instruments to Intent: How payments will be reimagined
In our understanding of financial innovation, by 2035, payments will no longer be experienced as discrete actions: scan/tap/wave/blink, click, and authenticate. Instead, they will increasingly be executed as a consequence of intent.
Thinking about that future, I wonder -
Will Indian merchants accept CBDCs or other programmable forms of money? Would it have to be government-backed currency?
Will bill payments become entirely automated or AI-assisted, requiring little to no human intervention?
Will checkout, as we know it today, disappear?
Will every smart device, from cars to kitchen appliances to eyewear, be payment-enabled?
In our attempt to predict, the answer to most of these questions is not binary. India’s future will not replace one system with another; it will layer intelligence onto existing rails, much as UPI layered real-time payments onto bank accounts.
The Global Context: Payments without borders
Going back to my childhood, my family’s first international trip was to the United States. Thousands of miles from home, my father (the de facto financial decision-maker in most Indian families at the time) had to carefully plan how we would pay for things abroad. We carried a fixed amount of US dollars in cash, along with a couple of internationally accepted credit cards. Those cards were treated as a last resort, to be used only if we ran out of cash or faced an emergency.
Fast forward to today, and while the world of payments has transformed dramatically within India, the experience of paying across borders has not evolved at the same pace. International payments are still layered with friction, uncertainty, and limited acceptance compared to the seamless digital journeys we now take for granted domestically. This is a space that deserves far more attention and innovation.
Thanks to the Internet of Things, globally, people are more mobile than ever. They travel, work, study, and live across geographies. What they do not want to think about is which card, app, wallet, or currency they should carry. Merchants feel the same pain.
Yet today, cross-border payments remain one of the most friction-ridden parts of the financial system. Currency conversion alone can account for up to 50% of total transaction costs, before compliance, settlement delays, and intermediary fees are even considered1.
The future demands a rewiring of cross-border payments, systems built for a world where families live across borders and commerce is inherently global.
Cross-border efficiency, however, cannot come at the cost of trust, safety, or regulatory compliance. Today, in 2026, the Indian regulator is thinking about bilateral or multilateral Central Bank Digital Currency (CBDC) corridors2. This is an area where India can play a shaping role, by helping build the case for interoperable CBDC arrangements among emerging markets and beyond.
One of the interesting initiatives has been Nexus Global Payments (NGP)3 by the Bank for International Settlements. It is a multilateral payment scheme dedicated to transforming cross-border transactions by connecting the domestic fast payment systems of each country. In its current version, it plans to link your bank account with an applicable ID (such as a mobile number), allowing you to send money cross-border within seconds. If done well, it can achieve instant payment linkages at scale through a multilateral approach. As per a World Bank assessment, the average cost of remittances is around 6.5% of the amount sent4. There is definitely scope to reduce this further through such a joint initiative.
Apart from linking the domestic fast payment services (a.k.a real-time payments), there are plethora of other solutions being discussed and developed. These range from relatively risky solutions like public blockchain (eg Bitcoin), stablecoin, to safer solutions like retail central bank digital currencies. I say relatively risky, but in its truest form, these alternate currencies are challenging money in the way we know it - issued by the central bank and based on a strong monetary policy.
In the universe of cross-border payment solutions, different economies have taken a variety of policy stances on it, based on the priorities and flexibilities of the regulator, the macroeconomic makeup of the country, and their monetary and fiscal regime. But one thing is certain: for different payment solutions to operate across jurisdictions, they must comply with multiple regulatory regimes - AML, KYC, and data protection without reintroducing friction for users.
AI-Native Commerce: When payments disappear into conversation
Perhaps the most transformative change in payments will not come from new rails, but from agentic AI.
We all know this but we don’t want to believe it - The future of commerce is conversational.
Users will increasingly fulfil purchasing needs by interacting with one or more large language models (LLMs).
Consider a thought experiment where I share with a device that I will traveling to Canada. The device will ask for my consent and begin to browse and track my activities over the internet and understand personal preferences and buying history, know my contextual needs (warm clothes, shoes, etc), recommend relevant products, verify that products from trusted and legitimate merchants, AND execute payments using the user’s preferred mode - UPI, card, credit, or CBDC. All within in a few minutes.
Behind this experience will lie enormous complexity. An LLM will have to stitch together multiple Model Context Protocols (MCPs) - identity, consent, catalogues, payments, logistics, and risk into a single, instantaneous flow. And the processors of our phones will also need to ramp up!
What a time it will be to live in. But let’s also remember that India is 1/6th of humanity. Every sixth person is an Indian. Which means that when technological innovations happen, it can go two ways - either it becomes a public good where everyone can benefits the fruits of these innovations, or it becomes a privately owned commodity that favours a specific target group, and they widen our fault lines. Which brings me to concluding concerns.
The equity challenge: What happens to small merchants?
While large platforms can easily integrate their data and catalogues into AI-driven commerce, long-tail merchants face a real risk of exclusion.
Small merchants often have limited digital data records, lack the technical bandwidth to implement complex computing infrastructure, and therefore may not understand how to surface inventory to LLM-based discovery systems. If left unaddressed, agentic commerce could deepen asymmetries rather than democratise opportunity.
The next phase of India’s Digital Public Infrastructure must therefore focus on equitable innovations. Some current processes that can help to tackle these challenges could be the use of Plug-and-play merchant discovery APIs, Standardised, consent-based data sharing and Low-cost onboarding into AI-native commerce networks. But innovations may require fresh thinking.
Just as UPI made digital payments accessible to the smallest kirana store, the next generation of infrastructure must ensure that AI-led commerce remains inclusive.
The future of payments in India is not about apps, cards, or even currencies. It is about building a financial superstructure - where payments, credit, savings, insurance, and commerce blend seamlessly into everyday life.
By 2035, the best payment experience may be the one users barely notice:
intelligent, context-aware, secure, privacy-protecting, real-time, interoperable, with the best UX. Cash will stay as a last resort, but payments will entirely be digitized in the coming decade. A long wishlist, indeed.
In that sense, the future of payments in India is not about removing layers but about ensuring every layer, old and new, continues to serve its purpose with trust at the core.
NPCI Innovators Playground Podcast -
https://www.nexusglobalpayments.org/wp-content/uploads/2025/03/Project-Nexus-Report-Phase-3.pdf
https://remittanceprices.worldbank.org/