India had been a “cash-obsessed” economy and has very recently shifted to its cashless phase. The progressive regulatory policies and increase in use of mobile internet, has contributed to transformational stage of payment industry. Digital payments started to pick up pace with the rapid growth of e-commerce along with digital wallet companies. In order to promote cashless transactions the digital wallets gave lucrative offers with cash backs which kept the consumers captivated. The increased smartphone penetration and economical data charges boosted the sector to greater heights.
The digital payment industry is projected to grow at an exponential rate. Surveys commit that 81 per cent of existing digital payment users prefer the virtual medium over physical transaction means like cheques or demand drafts. Online shopping, payment of utility bills and movie tickets are common transactions which have been made simpler and faster with this digital trend.
According to a report by Google and Boston Consulting Group (BCG), the Indian digital payments industry is estimated to touch $500 billion by 2020, which shall contribute 15% to the country’s GDP. Capgemini’s World Payment Report says that mobile wallets will experience a compound annual growth rate (CAGR) of 148% over the next five years and is estimated to be $4.4 billion by 2022. The digital wallets are also predicted to outperform UPI.
This exponential growth of the digital payment sector is driven by multiple factors including convenience to pay, the ever-growing smartphone penetration, rise of E-wallets, progressive regulatory policies and increasing consumer readiness to the digital payment platform.
The convenience to pay along with the availability of lucrative offers, are two key factors that have been driving the growth of digital payments in India. This coupled with the increasing smartphone penetration is proving to be a boon for digital payments sector. India, currently, has third largest internet user base in the world with 300 million users. As per survey, 50% of these users are connected to internet through mobile only. The 150 million mobile only internet users are playing a key role in the growth story of digital payments.
Clearly, the digital payment space is being transformed and the sector has witnessed tremendous growth, due to innovation and regulatory support over the last two years. Such has been the changes that India has become the most evolved country when it comes to the digital payment ecosystem. The focus should be to keep the momentum going with more support from the government and innovations, safety and convenience from the players such that India progresses digitally profoundly. I as a student of Calcutta Business School, is very much for this mode of payment as it simplifies transactions and hassle of carrying money is not there.
PGDM Batch 2019-21