Digital Payments – What Next?
The Digital Payment Systems Market in India market will witness a CAGR of 58.90% during the forecast period FY2017-FY2023.
Photo Credit : Reuters,
A few months after the demonetization drive in 2016, digital payments reached an all-time high, that lasted till the first half of 2017. However, post April, six months after demonetization, there was a substantial increase in ATM and POS transactions, suggesting that this inherently cash driven economy was going back to basics.
However, that may not be a completely accurate conclusion to draw, because though ATM transactions grew, so did online payment, mobile payment and mobile wallet transactions. According to a statement by principal advisor of government think-tank Niti Aayog, Ratan Watal, digital payments grew 55% by volume and 24.2% by value in 2016-17 over the previous year.
In the past few years, India’s branch based banking system has also evolved into branch-less channels of banking, which has given a further impetus to digital payments in both rural and urban regions. Indian digital payments industry is expected to reach $700 billion by 2022 in terms of value of transactions. The recent implementation of the Goods and Services Tax (GST), along with other government initiatives such as financial inclusion, better digital infrastructure, new payment systems such as Aadhar-enabled payments, UPI, etc. are also set to support the digital payments industry in India.
Besides payment gateways and wallets, another trend that is likely to garner more popularity in the coming years among millennials, is that of using social media for commerce. Currently, social media platforms such as Facebook and WhatsApp are being used to promote and conduct business, and it is only a matter of time when these platforms will enable payments to be made as well, giving an additional boost to home-grown businesses.
Challenges on the way
Digital payments are not new to the urban India, but the challenge is to get it down to grassroots level, to the digitally-illiterate common man, who still values his cash. Post demonetization, the focus has shifted towards making the transaction flow easier to understand for the middle-aged and not just millennials.
Another challenge that digital payment companies will have to face is that of security. With cyber-attacks on the rise, these gateways will have to take every precaution to make digital transactions safe and secure. However, even with these roadblocks, total payments via digital instruments are expected to touch $500 billion by 2020, according to a recent study.
What Lies Ahead
The Digital Payment Systems Market in India market will witness a CAGR of 58.90% during the forecast period FY2017-FY2023. There are many new players entering the digital payment scenario such Google with its latest payment app Tez, which saw 50,000 downloads, prior to its launch. The challenge is to make the people as comfortable with using apps and other digital payment platforms as they are reaching for their wallet.
There is a wave of change coming over the digital payment scenario with changing customer behaviour, increasing internet penetration rate, and government policies. Moreover, the growing demand for P2P payments, e-commerce platforms, utility bill payments, and others is pushing towards the development of digital infrastructure in India and providing a strong technological ecosystem for the digital payments industry.
Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house
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