India | 23rd July 2020: The ‘Empowering payments: Digital India on the path of revolution’ report – a comprehensive study on the digital payments industry was released today at the Virtual Global Fintech Fest (GFF) 2020 jointly by the Payments Council of India (PCI) and PWC. One of the key findings of the report is how the COVID-19 pandemic has presented a massive opportunity for the digital payments industry to flourish. With global transaction value for digital payments expected to reach $12.4 trillion by 2025, India is expected to contribute ~2.2% of the world’s digital payment market by 2023 alone.
Showcasing the grandeur of the India story, the report highlights how UPI, Bharat QR and mobile wallets have ensured last-mile connectivity, covering small merchants, tea-sellers and even hawkers. Underlining UPI, among the largest real-time payment systems in the world, the report estimates the home-grown platform to reach nearly ~59 bn in volume by 2023 owing to its high P2P type of transaction penetration. Clocking over 1bn transactions every month, the platform has witnessed a CAGR of ~785% in volume and ~570% in terms of value from financial year (FY) 2017 to FY 2020.
The report states that – India is one of the fastest growing countries in the world, showing rapid progression in transformation of digital payments, largely due to its large population and demographics. It has been attracting significant investments from private equity / venture capital firms and other international payment companies that want to enter India in the near future.
Among other top-rung digital products in the country, it stated – Bharat QR and Bharat Interface for Money (BHIM) QR, has also gained significant traction in the Indian market. Bharat bill payment system (BBPS) has shown remarkable growth with a CAGR of ~1,590% in volume and ~1,650% in value from FY 2017 to FY 2020. AePS on the other hand has been a game-changer for the government in fulfilling its goal of financial inclusion, and its adoption will only continue to grow in the coming years. The platform witnessed growth of ~253% in volume and ~264% in value and is expected to clock transactions worth 2467 mn and 7289 mn in volume and value respectively by FY23.
According to the report, India has been identified as a leader across parameters – regulation of costs of payment systems, laws in place, availability of alternate payment systems, share of e-money in payment systems, oversight by the Central Government, fast payment systems available in the country, volume and growth of e-money, etc.
The report also underlined the huge impact of the pandemic on the industry. With the sharp rise in demand for contactless increasing, businesses are looking at integrating their online and offline channels to provide an omni-channel experience to its customers. From the statistics of UPI, BBPS and NETC for the months of February to June 2020, the report suggested that a Vshaped recovery in the digital payment sector is being prompted.
According to the report, the global payment sector has been shaped by five trends — increasing degree of collaboration between fintech players, payment service providers and banks, the emergence of BigTech as viable payment option, modernisation of payment systems by leveraging new age technologies like AI/ML, RPA etc., regulatory reforms and evolving customer needs and the ability to deliver contextualized and personalized payment options, leveraging data. These trends have shaped the progress of payments globally and will be driving force behind the future of digital payments.
The report further highlighted that with collaborative efforts of the government, regulator and payment companies, the payments ecosystem is expected to improve in the future. The consumers would also play a crucial role in this transformation at the backdrop of increasing awareness and trust in the digital payment methods. India is expected to continue to serve as a global benchmark for countries in their endeavour of going towards a less-cash based economy.