Digital payments in India is set to grow three-fold to Rs 7,092 trillion, says a research report by RedSeer Consulting. It said the growth would depend on government policies around financial inclusion and digitisation of merchants.
According to the report, the current 160 million unique mobile payment users will grow by five times to reach about 800 million by 2025. The growth will be driven by demand and supply-side factors. Mobile payments will drive around 3.5% of total digital payments of Rs 2 trillion by the financial year 2025, up from the current one per cent, it said. “The total mobile payment users who currently stand at about 162 million would reach around 800 million during this period.”
Anil Kumar, RedSeer Consulting founder and CEO, described COVID-19 as a demonetisation-like catalyst for the industry. Digital payment providers have been quite hands-on in terms of responding to this situation, he said, by offering enhanced support on essentials such as offering groceries, masks, sanitisers, COVID-19 insurance, offering integration with donations to PM fund and other essential product and services.
Wallets, as the report points out, will continue to play a vital role in its growth with the continuous increase in both frequency and user base. And by 2025, wallets will have higher penetration and lower-income which will eventually drive multiple small-ticket transactions. The Bengaluru-based consultancy company estimates the growth of digital payments will come about by increasing penetration with offline merchants. It said the penetration with the unorganised retail sector would grow on the back of increased merchant digitalisation in cities beyond tier II.
The payment gateway aggregator market in India, according to the report, is expected to grow by 2.4 times driven by large value transactions. Moreover, it’s expected to grow at a compounded annual rate of 19 per cent in the next five years to reach Rs 22.6 trillion by FY2025. Furthermore, the payment gateway market is very much competitive, with leading players fighting for the market share.
