As per data by EY, UPI-based digital transactions have increased by 110% in volume and 109% in value, from June, 2020 till June, 2021.
UPI-based digital payment apps, which were on a growth trajectory even before the pandemic, are thriving in the new normal. A joint report by research firms Worldpay and FIS says 39.7% of India’s e-commerce payments were done through digital wallets in 2020 and wallets have now become the leading online payment method in the country. With consumers increasingly opting for digital transactions over cash ones, and with the simultaneous growth in e-commerce and internet penetration in India, digital payments are expected to continue on an upward trajectory.
The transition of small businesses to online media has also led to this growth. As per data by EY, UPI-based digital transactions have increased by 110% in volume and 109% in value, from June, 2020 till June, 2021. For most payment instruments, including UPI, debit and cards, and those at point-of-sales, the ticket size had come down during the first wave.
Nilesh Naker, partner – fintech, EY, says over the past few months, however, there has been a significant rise in ticket sizes. Spends through UPI have seen a rise of 29% in the average ticket size of transactions during the pandemic, year-on-year, from June 2020 till June 2021. “It shows that people are now comfortable using digital payments and willing to transact with higher amounts,” he notes.
Mahendra Nerurkar, CEO, Amazon Pay, shares that the company launched the ‘Amazon Pay Later’ feature in April, 2020. “Since then, we have recorded two million customers using the feature on the platform with around 10 million transactions clocked till June, 2021,” he says.
Similarly, PhonePe saw 50% month-on-month growth of new customers on its app from April, 2020 till June, 2021. Karthik Raghupathy, VP, strategy and business development, PhonePe, says, “Last year, we improved the ‘Stores’ discovery segment of our app with the addition of a remote payment option, information on merchant store timings, and chat options that connect consumers with their local grocery shops, pharmacies and other essential service providers.”
PhonePe recently launched a cash on delivery (COD) solution this month. Through a QR code, customers can pay for COD digitally through the app at the time of delivery. “This will drive contactless payments for customers who are traditionally more comfortable with cash on delivery,” adds Raghupathy. PhonePe claims that its user base has grown from 200 million in March, 2020 to more than 300 million, currently.
Akshay Mehrotra, co-founder and CEO, EarlySalary and founding member, Fintech Association for Consumer Empowerment (FACE), says, “Digital payments have become significant not only for online platforms but also for in-store shopping.”
Vivek Belgavi, partner and leader, fintech, PwC India, observes that with the lifting of restrictions and the economy opening up, there may be a slight change in consumer behaviour. Digital payments will continue to be relevant though, he says.
With WhatsApp Pay receiving the go-ahead with a user-base cap of 20 million in November 2020, things are likely to get even more of a fillip because of the sheer scale of WhatsApp as a chat platform. Naker says, “We expect a growth trajectory as high as 10-15 times that of the current UPI transaction market over the next three to five years.”