1. Indian Digital payments industry currently stands at INR 2,153 Tn and will grow at 27% CAGR to reach INR 7,092 Tn by FY25

While Mobile payments account for ~1.15% of the Digital Payments value, they grew at a CAGR of 213% in FY 15-20

Digital Payments split by Value
(In INR Tn)

This growth will be driven by:

  • COVID-19 outbreak which would gradually lead to a change in consumer behaviour as they incline more towards digital.
  • Government policies such as Jan Dhan Yojana, personal data protection bill along with growth of MSMEs.
  • Low penetration of banking and financial services in India; growth of millennials & high smartphone penetration, indicating strong headroom for growth.

2. Mobile payments currently stands at INR 25 Tn and is expected to grow at 58% CAGR to reach INR 245 Tn by FY25

In Post COVID scenario, Mobile payments will lead to an additional INR 12 Tn of digital payments by value as consumers get more inclined towards digital payments driven by contactless push to avoid the risk of virus

Mobile payments by value
(In INR Tn)


  • Pre COVID Scenario- Pre COVID scenario of FY 25 is based on RBI’s vision 2021.A
  • Post COVID Scenario- Post COVID scenario of FY 25 is built on the COVID impact on Mobile payments which has led to a dip in transactions in Mar & Apr but would eventually lead to a change in consumer’s behavior with more inclination towards digital payments.
  • RBI aims that UPI is expected to grow at an annualized growth rate of 100% in FY 21 & FY 22.
  • Henceforth, all calculations are based on Post COVID scenario.

This growth will be driven by:

  • High consumer satisfaction for mobile payments when compared to other modes.
  • Government policies such as Removal of MDR, mandatory UPI QR for businesses (turnover INR 50Cr or above), Video KYC and others, which is a catalyst for merchants, and will ultimately increase the customer’s usage of mobile payments.

3. P2M Market (merchant payments) currently stands at INR 4 Tn and is expected to grow at 52% CAGR to reach INR 33 Tn by FY25

P2M payments have seen huge growth of ~161% in past 5 years and would continue a healthy growth of ~52% until FY 25.

Mobile driven payments in P2M by value
(In INR Tn)


  • UPI was launched in 2016 hence is zero in 2015.

This growth is driven by:

  • Strong use case of merchant payments across user cohorts.
  • High consumer and merchant satisfaction for Mobile payments in P2M.
  • Simplified consumer & merchant journey when compared to other modes of payment.
  • Paytm is the largest player in the P2M Market with 50% market share followed by Phonepe and Google Pay.

4. The Indian EDC market stands at ~5 Mn terminals and is expected to grow by more than 3x by FY25 driven by growth of MSMEs, growth in cards & more

EDCA Market in India is expected to grow at cagr of ~27% (FY 20-25) to reach ~17 Mn terminals…

Total EDC market by terminals(Jan, FY20)
(In Mn)


  • EDC includes wire/lan, linux based, android based, mpos

…driven by factors such as growth in E-commerce, MSME retail, Govt. initiatives etc. as detailed below.

This significant opportunity has led to the entry of multiple new age digital players such as mSwipe, Pinelabs, Ezetap, Paytm and others.

5. The Payment gateway aggregator market in India currently stands at INR 9.5 Tn TPV & is expected to grow by 2.4x driven by large value transactions

Payment gateway aggregator market in India is expected to grow at cagr of ~19% (2020-25) and is…

Total EDC market by terminals(Jan, FY20)
(In Mn)


  • FY 2020 is based on bottom up sizing of the market.

…driven by factors such as large value transactions by enterprises, new age companies, removal of MDR & more.

A number of leading players such as Paytm & Billdesk drive ~76% share of this gateway aggregator market in terms of transactions.

6. Integrated Financial services’ models are better placed on their path to profitability vis-à-vis standalone models


  • Others include services such as Bookkeeping, ATM services and more

1. While ‘Integrated Financial services’ models offer multiple services/ products apart from the core offering of payments, standalone models only offer digital payment as their core offerings and as a result face challenges of revenue realization and profitability.

2. Basis our analysis, we believe that ‘Integrated Financial services’ will address these challenges of standalone model based on 3 levers:

  • Higher consumer satisfaction as consumers find multiple solutions on the same platform.
  • Higher merchant satisfaction as ease of doing business improves with multiple services available on the same platform.
  • Better monetization as an integrated model enables cross-selling multiple services leading to higher revenue generation and better take rates.

3. In India, multiple digital payment players have started taking the integrated route over the last few years.

  •  Paytm has taken an integrated route by adding multiple services in its portfolio such as lending, insurtech, wealthtech, payments bank along with EDC terminals, gateway aggregator & e-commerce.
  • Similarly PhonePe is offering insurtech, wealthtech, e-commerce & ATM services and plans to offer lending in future.
  • Google pay is offering wealthtech and plans to enter into lending and insurtech soon.
  • At the same time Mobikwik is offering services such as lending, insurtech and wealthtech.

Going forward, these players will continue to expand their portfolio and at the same time consolidate their position in each of these verticals.

This significant opportunity has led to the entry of multiple new age digital players such as mSwipe, Pinelabs, Ezetap, Paytm and others.


  • Mrigank leads business research and strategy engagements for leading internet sector corporates at Redseer Strategy Consultants. He has developed multiple thought papers and is regularly quoted in media and industry circles.