The nascent however rapid-evolving digital payments market in India, propelled by policy framework and technologies penetration, is anticipated to develop at a compound annual development price of 27 per cent through the FY20-25 period. The development in retail electronic payment systems like National Electronic Fund Transfer (NEFT), mobile banking, and improvement of payment acceptance infrastructure is most likely to enhance digital payment transactions from Rs 2,153 lakh crore in FY20 to Rs 7,092 lakh crore in FY25, according to the India Trend Book Report 2021 by the Indian Private Equity and Venture Capital Association (IVCA) and Ernst & Young.
The digital payments market place, which has been led by providers such as Paytm, PhonePe, Pine Labs, Razorpay, BharatPe, and other folks on the B2C and B2B sides, has surged expeditiously with companies supplying money backs, rewards, and presents to woo consumers. Moreover, the current pandemic has stimulated the demand for digital wallets as contactless payment is reckoned as the new normal protocol. Policy frameworks, on the other hand, such as Pre-Paid Instruments (PPI), Universal Payment Interface (UPI) by the NPCI apart from Aadhar, and the launch of BHIM-app have driven the economic inclusion and enhanced the payment acceptance infrastructure in the nation.
In terms of segment-sensible development, the payment gateway aggregator market place is anticipated to develop at about 19 per cent CAGR from Rs 9.5 lakh crore in FY20 to Rs 22.6 lakh crore in FY25 when the merchant payments segment is most likely to see 52 per cent development from Rs 4.7 lakh crore to Rs 33 lakh crore through the stated period. The maximum development is most likely to be witnessed in the mobile payments segment at 58 per cent from Rs 25 lakh crore to Rs 245 lakh crore.
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Meanwhile, the general fintech market place, which also catered to on line lending, wealth management, insurance coverage technologies, and so forth., is most likely to develop from Rs 1.9 lakh crore in 2019 at a CAGR of 22.7 per cent through the period 2020-25. While some fintech subsectors such as MSME digital lending have been facing short-term downturn, other folks like digital payments and insurtech have benefitted from Covid-induced digital adoption amongst shoppers. According to the IVCA report, India has emerged as Asia’s largest location for fintech offers, leaving behind China in the quarter ended June 2020. Amid COVID-19, India saw a 60 per cent YoY raise in fintech investments to $1.5 billion in 1H20.
“Covid-19 pandemic has accelerated the shift toward a more digital world. It has changed the ways businesses were done and technology is at the forefront of these changes. Opportunities for internet and tech companies have increased multifold in the last one year. Wide penetration of internet and lower internet cost has complemented the digital and technology trend for consumers and have changed the ways of shopping, education, agriculture, retail, logistics, finance, health, etc. businesses,” stated Ankur Bansal, Co-founder and Director, BlackSoil.