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Jan, 2022     

Burgeoning EDC Market: How Merchants Are Driving India’s Digital Payments

The Indian EDC market stands at ~4.7 Mn terminals and is expected to grow to ~12 Mn by FY25, with steady adoption across merchants


EDC is a critical technology that a POS system uses to process the closure of a financial transaction. India, once dominated by cash, is slowly but surely evolving to meet the demands of its growing smartphone-led populace. Now, cards and digital wallets are gaining prominence. A decline in the usage of hard cash, and digital acceptance among merchants, has opened pathways of growth in India’s Electronic Data Capture (EDC) market.

Now, let’s see how merchants are driving the growth of India’s EDC market, translating to an upsurge in the adoption of digital payments!

1. The Indian EDC market stands at ~4.7 Mn terminals and is expected to grow to ~12 Mn by FY25, with steady adoption across merchants

Merchants, who were once wary of digital payments and relied heavily on cash, are now opening up to payments via the digital way. In FY17, the total EDC deployed stood at ~2.9 Mn, it rose to ~4.7 Mn in FY21, and is all set to hit a whopping ~12 Mn by FY25, as per our findings.

2. This upsurge in India’s digital payments and EDC market is being driven by steady growth of its merchant funnel

A significant change is expected in India’s digital merchant payments landscape in coming years- creating a $1.4 Tn opportunity. Merchants of today are more accepting of digital payments.

3. EDC is picking up alongside QR code, which is a preferred payment solution with offline merchants’ sector, driven by growing consumer preference

Continued adoption of QR for small and mid size transactions amongst offline merchants will enable them to become a key offline payment category. In addition to this, there is also a steady growth in credit/debit cards for large ticket transactions.

4. Majority of the offline merchants ( ~ 90%) are using both POS and QR code, and open to add more terminals to get better pricing through different bank tie ups

About two-third of the merchants who use only POS intend to add other terminals. The primary reason for this is to get better pricing through different bank tie-ups.

The rapid adoption of digital payments among consumers is hard to miss. Understandably, merchants want to leverage this and keep up with the monumental shift from cash to cashless. Another factor that merchants are leveraging include demonetization, which led to a crash crunch in the economy leading to the adoption of alternate payment modes such as cards and drove rapid EDC adoption across merchants. Add to this the rise in e-commerce, where payments are mostly digital, and government initiatives that are directed towards a cashless economy, and it is safe to say that the EDC market is set to see an upward trend in the years to come!