India's Digital Payments in the Future Market
2016-10-31 Posted By:Infra Bazaar Pvt Ltd. Views : 1177
Mumbai: In the past few years, the payments acquired in India were changed from standard payment methods to digital payment methods witnessing some aggressive growth. If the growth is increased gradually sooner India’s Digital Payments will hit $500Billion by 2020, contributing to 15% of India’s GDP (Gross Domestic Product), as per the recent report by Google and Boston Consulting Group.
The report which is submitted by Google and Boston Consulting Group is based on Nielsen’s qualitative and quantitative research with over 3,500 representatives (digital consumers – 1,516, exporters – 917 and remittance users – 917) the research was done across 9 locations in India which are Delhi, Mumbai, Bangalore, Visakhapatnam, Surat, Indore, Lucknow, Ludhiana and Coimbatore.
As per the report, by 2020, non-cash (includes demand drafts, cheques, net-banking, credit/debit cards, mobile wallets and UPI) contribution in the consumer payments will become double which is up to 40%. Already 81% of the users who are currently using the digital payment methods, all of them love to transact by non-cash payment methods. 90% of the Indian consumers like digital payment methods for both online payments and offline payment methods. Over 60% of the payments were the digital payments, and contributed by offline points for sale.
Major Highlights of the Report:
- Online shopping, Utility bills payments and Booking/Buying movie tickets are the top three actions getting done by an Indian user.
- Mostly offers to purchase some product/item is the very powerful trick to attract the digital payment User for the growth of the digital payment methods.
- 50% of the transactions were user to merchant; those are expected to be under INR 100.
- The value of the remittances and money transfer will be increased up to 30% by 2020 in the market.
- Globally, the FinTech startups have doubled to 1,000 in 5 years approximately. With funding growing 6X to reach $11 Billion in 2015.
- India present at No. 2 in the world, by enquiring 1 Billion mobile connections. In those 1 Billion connections, only 300 Millions of the people using Internet and 240 Millions were Smart Phone users. Based on the report and the Smart Phone users will increase up to 520 Million by 2020.
- 75% of the people would believe that the Digital Payments will become future market.
Payment Ecosystem Expectation in next 5 years:
- Technology which includes funds transfer or purchasing products online will be made simpler in days to come.
- Merchant’s percentage who are accepting digital payments will be increased up to 10X by 2020.
- Payments will drive consumption and end users will use each and every penny using digital payments.
- Customers will get the best and will benefit from offers, coupon codes and relevant deals for their needs.
- UPI (Unified Payments Interface) was modified and that will be the game changer. It will provide a great platform to provide seamless interoperability of PSPs. Modified to overcome the challenges occurring presently it can also drive large-scale adaption of digital payments.
- Using Aadhar for online authentication and the confirmation for KYC data will boost the growth of digital payments systems.
Challenges over Digital Payments:
The research has shown that the 1 out of 2 non-users haven’t used digital payments because they found that the product is too complicated to understand and 61% of people found it is too difficult to use. Additionally, the universal acceptance of digital payment methods and merchant concerns around the speed of transactions during peak hours, have emerged as other inhibitors to usage. In order to accelerate the appraisal of a successful and economically visible payment in India, one must focus on building simplified products for the end users, addressing the customer needs.