By 2020, India will see digital payment growth of 10 times its current size, hitting $500 billion and contributing 15 percent to the country’s gross domestic product. That’s according to a new study conducted by Google and Boston Consulting Group.
According to the study, the digital payments market will see fast growth fueled by an increase in smartphone adoption, the entrance of several nonbanking companies offering payment services, consumers’ readiness to embrace digital payments and changes in the regulatory framework in India.
“Spurred by smartphone penetration and supported by progressive regulatory policy, the digital payments industry is at an inflection point and is set to grow 10x by 2020,” said Rajan Anandan, vice president of Google in Southeast Asia and India, in a press release. “It is telling that half of India’s internet users will use digital payments and that the top 100 million users will drive 70 percent of the GMV [gross merchandise value] — a clear indicator of the growing importance of the digital consumer.”
The study, which is based on responses from over 3,500 people, was conducted by Nielsen and also found that consumers ranked convenience and availability as the reasons they were embracing digital payments. The size of the transactions are still in the small range, with 50 percent of the person-to-merchant purchases expected to be under Rs 100. There’s also a high likelihood that digital payments will be used online and offline, with 90 percent of respondents signaling they would use it in both mediums.
While an increase in digital payment usage is good news for all the existing and up-and-coming payment providers, the study found something even more positive: Digital payments are not a flash in the pan in India. The report found that 81 percent of people already using digital payments said they would stick with it instead of moving to another noncash payment method, like checks.