While digital payment adoption began to grow significantly post demonetisation, the COVID-19 pandemic accelerated this shift over the last year, according to PwC India’s Indian Payments Handbook. The total value of digital payments is expected to grow to ₹238 lakh crore by 2024-25 from ₹92 lakh crore in 2019-20, while the total volume of transactions is expected to grow to 167 billion from 42 billion during the same period, the report says.
“Growth in digital payments in India has been driven by multiple factors such as the launch of new and innovative payment products, increasing smartphone adoption, a growing need for faster payment modes, and a strong push from the Government and regulators towards adoption of digital channels, the report says. levels. “We have seen a V-shaped recovery post the pandemic, as the outbreak accelerated the shift to digital platforms. Businesses are now looking to integrate both online and offline channels in order to provide an omnichannel experience to their customers,” it added.
The report says banks, non-bank entities, fintechs and BigTechs that have so far benefited from the rise in digital payments adoption, will help grow the ecosystem further through new products and platforms. “Digital payments have evolved from being viewed as a cost centre for banks to a revenue centre and a key lever for customer acquisition. Financial companies have stepped up their efforts to strengthen their payment infrastructure and have started offering other adjacent services such as lending, wealth management, microinsurance, and use of data analytics to offer for more customised solutions for customers,” it said.
It expects that the Indian payments ecosystem will earn revenues upwards of ₹2,930 crore by 2024-25 from around ₹1,980 crore in 2019-20.
The report adds that a combination of artificial intelligence and data analytics will give rise to contextual payments, which banks can develop to provide better customer experiences at lower costs. Further, it expects contactless payments and offline payments play a significant role in driving the growth of digital payments in the country.
Projections for retail payments
Unified Payments Interface (UPI)
- User-base to grow from 200 million at present to 300 million by 2022
- Person-2-Merchant transactions will take over Person-2-Person transactions going forward. At present, P2M transactions account for 40% of all UPI transactions
- Total transactions to grow from ₹21 lakh crore in 2019-20 to ₹128 lakh crore by 2024-25
- Revenues from UPI to grow to over ₹20,000 crore by 2024-25 from ₹3,000 crore in 2019-20
- UPI to have the maximum share of digital transactions by 2025
National Electronic Toll Collection or FASTag
- FASTag issueance to reach 25 million in 2020-21 from 17 million at present
- Total transactions to grow from ₹10,000 crore in 2019-20 to ₹2 lakh crore by 2024-25
- New payments use-cases will emerge like traffic fines, fuel payments and parking space
- Revenues from FASTag to grow to over ₹4,900 crore by 2024-25 from ₹400 crore in 2019-20
Bharat Bill Pay System (BBPS)
- Total transactions to grow from ₹1.44 lakh crore in 2019-20 to ₹12 lakh crore by 2024-25
- New biller categories include insurance, credit cards, local taxes, educational institutions, housing societies, gyms and clubs
- Revenues from BBPS to grow to over ₹4,900 crore by 2024-25 from ₹900 crore in 2019-20
Aadhar-enabled Payments System (AEPS)
- Transactions on AEPS to grow to 10 billion in 2024-25 from 2.4 billion in 2019-20
- Transactions on AEPS to grow to ₹10.1 lakh crore in 2024-25 from ₹1.2 lakh crore in 2019-20
- Revenues from AEPS to grow to over ₹6,700 crore by 2024-25 from ₹700 crore in 2019-20
Debit and Credit cards
- As of July 2020, there were 852 million debit cards and 57 million credit cards
- Card transactions will grow by 20% in the next 5 years
- Debit card transactions expected to grow to ₹11.2 lakh crore in 2024-25 from₹8 lakh crore in 2019-20
- Credit card transactions expected to grow to ₹10 lakh crore in 2024-25 from₹7.3 lakh crore in 2019-20
Prepaid Payment Instruments
- Transactions via PPIs to grow to 15.7 billion in 2024-25 from 9.2 billion in 2019-20
- Transactions via PPS to grow to ₹11.4 lakh crore in 2024-25 from ₹8.9 lakh crore in 2019-20
- Revenues from PPIS to grow to over ₹49,700 crore by 2024-25 from ₹37,400 crore in 2019-20
- NPCI’s flagship platforms get a helping hand from COVID-19 lockdowns
- UPI to process transactions worth 15% of India’s GDP this year, says head of NPCI International
- NPCI publishes UPI market share data, yet to consult players on 30% cap
- Payment companies suffer frequent UPI system outages