Consumption spends picked up in some segments during the month of June as lockdown restrictions were eased in many parts of the country, payment industry players said.
Consumption spends picked up in some segments during the month of June as lockdown restrictions were eased in many parts of the country, payment industry players said. Credit card payment app Cred said in its June 2020 newsletter that apart from Mumbai, other geographies saw a rise in spending by affluent individuals. Razorpay also saw an improvement in spending in some segments, led by logistics, healthcare, and real estate.
However, this does not mean that households are free from financial stress, which has now started to show up in the form of a change in preferred modes of payment. In the sixth edition of its report titled ‘Era of Rising Fintech’, Razorpay said, “Paylater, Cardless-EMI & EMI have become preferred payment modes with a growth of 290%, 178% and 125% respectively, due to stress in income across households.”
Moreover, even as the demand scenario improves, the overall revenue in the digital payments market is likely to drop this year as the value of transactions has been falling, Razorpay said. This is due to losses in the e-commerce, travel, hospitality and lending sectors.
Over the 30-day period between June 3 and July 2, digital payment transactions rebounded 23%. Transactions are still not back to pre-Covid levels on Razorpay’s platform as in the 101-day period since March 24, they are still 12% lower. The sectors that have led the rebound in payment activity are logistics (up 687%), real estate (496%) and healthcare (166%). The two segments which have seen a decline in transactions are peer-to-peer (P2P) lending and utilities, which fell 41% and 13% respectively, as compared to the first phase of the lockdown.
At the same time, utility bill payments continued to be a significant contributor to online merchant transactions and comprised 20% of all such transactions. The largest contributor was financial services, which accounted for 27%. Online spending in the food and beverages (F&B) segment saw a pick-up in its share of transactions through June, rising to 13% of the pie from just 7% earlier.
Cred also said there has been a spike in spending on dining and food ordering. Spends on dining rose 162% in Delhi, 110% in Bengaluru and 70% in Mumbai during May and early June. Food-ordering spends jumped 34% in Delhi, 20% in Mumbai and just about 2% in Bengaluru. Spends on online shopping and travel have also shot up by up to 233% and 197% respectively. Digital subscriptions saw spends drop up to 37%.