Digital payments in India: What’s driving the Big growth
Ecommerce, gaming, utilities, government services, and financial services reportedly dominated online transactions in the second half of 2023, accounting for nearly 80% of the total volume. The findings are of a recent report by French payment firm Worldline on India’s evolving digital payment landscape. The report, titled India Digital Payments Report H22023, reveals a significant shift towards mobile wallets and UPI (Unified Payments Interface) transactions.
Ecommerce Leads Online Transactions
In-store transactions were primarily driven by everyday purchases at grocery stores, restaurants, service stations, clothing stores, pharmacies, and hospitals, contributing roughly 65% of the transaction volume and nearly 50% of the total value.
UPI Reigns Supreme
The report highlights a remarkable 56% year-on-year growth in UPI transactions between July and December 2023. The total volume surged to a staggering 65.7 billion transactions, compared to 42.1 billion in the same period last year. The value of these transactions also witnessed a significant rise of 44%, reaching Rs 99.68 lakh crore.
Growth in Payment Acceptance Channels
The report emphasizes the rapid increase in payment acceptance channels across India. The number of point-of-sale (PoS) terminals witnessed a substantial 26% growth, reaching 8.5 million by December 2023. Private sector banks hold the major share (73%) in this space, followed by public sector banks (18%). UPI QR transactions also displayed a significant jump of 57% during this period.
Credit Cards See Uptick, Debit Cards Stagnant
While UPI dominates digital payments, the report acknowledges a modest growth in the total number of cards in circulation, reaching 1.3 billion. Credit cards saw the most significant increase (21% year-on-year) compared to prepaid cards (13%) and debit cards (2%). However, the overall volume of card transactions witnessed a decline of 7%. Interestingly, card transactions on PoS terminals showed an 8% rise in the second half of 2023.
Electronic Toll Collection on the Rise
The report also highlights the growing adoption of electronic toll collection, with the number of tags issued growing by a substantial 45%, indicating a shift towards a more seamless highway experience.
Mobile Payments Here to Stay
The significant growth in UPI transactions and the widespread adoption of digital payment channels point towards a future where mobile wallets are the preferred mode of payment for both online and in-store purchases.
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