The Indian digital payments industry is estimated to reach a size of $500 billion by 2020 and will contribute around 15% to the country’s gross domestic product (GDP), a survey conducted by Google and Boston Consulting Group revealed.
The survey also revealed that by 2020, around 40% of all consumer payments will become non-cash.
“Spurred by smartphone penetration, and supported by progressive regulatory policy, the digital payments industry is at an inflection point and is set to grow 10 times by 2020,” Rajan Anandan, vice president – South East Asia & India at Google, said in a statement.
According to the report, over 80% of existing digital payment users prefer digital payment over any other non-cash form of payment, like credit cards and debit cards. The primary factor driving this growth is convenience, closely followed by different kinds of offers while opting for digital methods to pay.
The report also said that going ahead, micro-sized transactions will constitute a major chunk of all digital payments, with more than half the person-to-merchant transactions seen to be under R100 each.
“The smartphone explosion will usher in a new era in digital payments in India over the next few years that will see digital payments exceed $500 billion by 2020 and non-cash transactions exceed cash transactions by 2023,” Alpesh Shah, senior partner and managing director at Boston Consulting Group in India, said.
However, the digital payments industry has a list of challenges to tackle on its way to the $500-billion mark. The survey revealed that every one of two non-users hasn’t used any kind of digital payment avenues because they find the product to be too complicated to understand.
Also, concerns about the speed of transactions during peak hours has emerged as another reason for non-users staying off digital payment.