The India Digital Payments market is expected to grow at a CAGR of 21.07% to reach US$71.561 trillion in 2025 from US$22.723 trillion in 2019. The market has seen a positive growth in the number of people opting for digital payments during the pandemic, given the government regulations and laws encouraging social distancing and touchless transactions. The market is expected to grow at a significant rate in the coming years owing to the increased number of people who opted for digital payments during the pandemic and the increasing awareness about the “Digital India” campaign wherein the digitalization of banking services has been made easier for people to access. The market is also fuelled by the increasing use of UPI payment options through both wallets and banks which has made the payments through the bank of the consumer a lot easier. The payment wallet solution will continue to dominate the market in the coming years as well owing to the increase in the frequency as well as the user base for the solution. The payment wallet solution allows the user to have a digital wallet wherein the money can be easily transferred from their bank using various methods like UPI, net banking, etc.
THE PANDEMIC PROVED TO BE A TAILWIND FOR THE MARKET
Digital payments market in India is fueled by the lockdown and the pandemic which encouraged the use of touchless payment options and thus proved to be a successful tailwind to the market. The government encouraged the population to use more of touchless payment options and thus making more people to use digital payment options. Furthermore, with an increased user base, the service providers are offering more on their platforms in order to retain the customers. For eg, the PayTm Payments bank now allows you to pay for electricity bills, has a Paytm Malls option with attractive cashback offers and so on. With the lockdown in the picture, the customers opted for shopping online more often than going to the offline stores and thus helping the digital payments market in India to grow.
RETAIL AND E-COMMERCE ARE SET TO GROW AT THE HIGHEST RATE
With the COVID-19 in the picture and the consecutive lockdowns in order to fight the pandemic, the e-commerce market has seen a significant growth this year in their user base with online grocery stores like Grofers and Big Basket witnessing the highest of them all. Even after the lockdown was lifted, the population was encouraged to still use touchless payment methods in order to limit human touch. Taking into consideration the pandemic a significant percentage of the population shifted towards online shopping and digital payments. The trend is expected to grow during the coming years.
INITIATIVES BY THE GOVERNMENT WILL DRIVE THE MARKET
The government with encouraging the population to use digital payment methods to avoid human touch has also come up with important initiatives like the Ministry of Electronics and Information technology (MeitY) has come up with an initiative named as Digidhan wherein the ministry is collaborating with key stakeholders in the industry for the promotion of digital payments. The ministry is also in the process of introducing newer measures in order to increase the awareness about digital payment methods with setting target for banks to process digital payment transactions.