Digital payments are the new normal: UPI-based payment apps, digital wallets now eyeing small towns
UPI-based digital payment apps, which were on a growth trajectory even before the pandemic, are thriving into the new normal. A joint report by research companies Worldpay and FIS says that 39.7% of e-commerce payments in India were made through digital wallets in 2020 and that wallets have now become the country’s primary online payment method. As consumers increasingly opt for digital rather than cash transactions, and with the simultaneous growth of e-commerce and internet penetration in India, digital payments are expected to continue on an upward trajectory.
The transition of small businesses to online media has also led to this growth. According to EY data, UPI-based digital transactions grew 110% in volume and 109% in value, from June 2020 to June 2021. For most payment instruments, including UPI, cards debit and debit, and those at point-of-sales, ticket sizes had declined in the first wave.
Nilesh Naker, partner – fintech, EY, says that over the past few months, however, there has been a significant increase in ticket sizes. Spending through UPI saw a 29% increase in the average transaction size during the pandemic, year over year, from June 2020 to June 2021. “It shows that people are now comfortable with it. digital payments and willing to transact with higher amounts, ”he notes.
Mahendra Nerurkar, CEO of Amazon Pay, shares that the company launched the ‘Amazon Pay Later’ feature in April 2020. “Since then we have registered two million customers using the feature on the platform with around 10 million transactions clocked through June, 2021, ”he said.
Likewise, PhonePe saw 50% monthly growth in new customers to its app from April 2020 to June 2021. Karthik Raghupathy, Vice President, Strategy and Business Development, PhonePe said: ‘Our app discovery segment with the addition of a remote payment option, merchant store hours information, and chat options that connect consumers to their local grocery stores, pharmacies and other essential service providers.
PhonePe recently launched a cash on delivery (COD) solution this month. Using a QR code, customers can pay for COD digitally through the app at the time of delivery. “This will result in contactless payments for customers who are traditionally more comfortable with cash on delivery,” adds Raghupathy. PhonePe claims its user base has grown from 200 million in March 2020 to over 300 million currently.
Akshay Mehrotra, co-founder and CEO of EarlySalary and founding member of the Fintech Association for Consumer Empowerment (FACE), says: “Digital payments have become important not only for online platforms, but also for in-store purchases.
Vivek Belgavi, partner and leader, fintech, PwC India, observes that with the lifting of restrictions and the opening of the economy, there could be a slight change in consumer behavior. Digital payments will continue to be relevant, however, he says.
With WhatsApp Pay getting the green light with a user base cap of 20 million in November 2020, things are likely to get even more exciting due to the scale of WhatsApp as a chat platform. Naker says, “We forecast a growth path as high as 10 to 15 times that of the current UPI transaction market over the next three to five years. “