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Indian Mobile Payments: 5x growth by 2025

Executive Summary

Story of potential 800 million Indian mobile payment consumers

1. Indian Digital payments industry currently stands at INR 2,153 Tn (~961% of GDP) and will grow at 27% CAGR to reach INR 7,092 Tn (~2278% of GDP) by FY25. This growth will be driven by:

  1. Strong use case of merchant payments
    across user cohorts.
  2. Government policies such as Jan Dhan Yojana, personal data protection bill along
    with growth of MSMEs.
  3. Low penetration of banking and financialservices 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. This growth will be driven by:  

  1. High consumer satisfaction for mobile payments when compared to other modes.
  2. 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 thereby customers to increase usage.

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. This growth is driven by:

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

4. EDC & payment gateway aggregators are expected to grow significantly by FY25:

  1. The EDC market currently stands at ~5 Mn terminals and is expected to grow to ~17 Mn terminals by FY25 driven by Logistics, E-commerce, Foodtech, growth of MSMEs, increased usage by traffic police as well as Government initiatives.
  2. This significant opportunity has led to the entry of multiple new age digital players such
    as mSwipe, Pinelabs, Ezetap, Paytm and others. 
  3. A number of Leading players such as Paytm & Billdesk drive ~76% share of this gateway aggregator market in terms of transactions.

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

  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 report covers sector-level insights such as Indian mobile payments market growth as well as player-level insights such as or related to Paytm revenue, Paytm business model, Google Pay business model, Paytm market share and PhonePe revenue, among others.

  • See: Inside the Report

    1.  Indian Digital Payments Landscape

    1. 1 Growth of Indian GDP

    1.2 Drivers of growth of Indian GDP

    1.3 Total payments market

    1.4 Share of Cash, Digital payments, Paper-based payments of the Total payments market

    1.5 Forecasts of Total payments market for FY25

    1.6 Growth Drivers of Digital payments in India

    1.6.1 Covid Impact

    1.6.2 Consumer spending pattern by payment modes

    1.6.3 Merchant revenue split by payment modes

    1.6.4 Consumer & merchant satisfaction for Digital payments

    1.6.5 Other Drivers

    2. Mobile payments revolutionizing P2M

    2.1 Evolution of Mobile payments

    2.2 Digital payments market by value

    2.3 Share of Mobile payments of the total Digital payments market

    2.4 Forecasts of Digital payments by FY25

    2.5 Internet usage Funnel - Number of mobile payment users in FY20 & FY25

    2.6 Forecasts of Mobile payments for FY25 by value and volume

    2.7 Growth Drivers of Mobile payments

    2.8 P2M market size by volume and value

    2.9 Forecasts of P2M market by FY25

    2.10 Consumer personas

    2.11 Consumer and merchant satisfaction for payment modes

    2.12 Consumer journey in P2M payments

    2.13 Merchant journey in P2M payments

    2.14 Market share of players in P2M

    2.15 Consumer satisfaction by player

    2.16 Brand recall and awareness of payment players among merchants

    3. Payment Enablers (EDC, Gateway aggregators)

    3.1 EDC Market in India

    3.1.1 EDC market size and growth drivers

    3.1.2 Forecasts of EDC market in India by FY25

    3.1.3 Share of Terminals by Merchant category

    3.1.4 Market share of EDC players

    3.1.5 Timeline of growth of EDC players

    3.2 Payment gateway aggregator Market in India

    3.2.1 Market size by TPV and growth drivers

    3.2.2 Forecasts of PG aggregator market in India by FY25

    3.2.3 Market share of PG aggregator by Volume

    3.2.4 Market share of PG aggregator by Value

    4. Transformation from Digital payments to Financial services

    4.1 Positioning of Fintech verticals on user base vs. usage frequency

    4.2 Standalone vs. Integrated financial services business models

    4.3 Business models of Digital payment players in India

    4.4 Merits of Integrated financial services business model

    4.5 Consumer and merchant satisfaction of Integrated and Standalone model

    4.6 Portfolio of services vs revenue generated by player

    5. Selected case studies of Digital payments Players

    5.1 Paytm

    5.2 PhonePe

    5.3 Google Pay

    5.4 Pinelabs
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