The size of digital payments industry in India will be $500bn by 2020, accounting for 15% to the country’s gross domestic product (GDP), according to a report by Google and Boston Consulting Group (BCG).
Further, non-cash contribution in the consumer payments segment will double to 40% by 2020. Non-cash includes cheques, demand drafts, net-banking, credit/debit cards, mobile wallets and UPI.
The report noted that 81% of existing digital payment users prefer it to any other non-cash payment methods. Online, shopping, payment of utility bills and buying movie tickets emerged as the three top things that a user primarily interacts with.
The report further revealed that Indian consumers, are 90% as likely, to use digital payments for both online as well as offline transactions.
By 2020, more than 60% of digital payments value will be contributed by offline points of sale such as unorganized retail, eateries, transport etc.
Google vice president for SEA & India Rajan Anandan said: “Spurred by smartphone penetration, and supported by progressive regulatory policy, the digital payments industry is at an inflection point and is set to grow 10X by 2020. It is telling that half of India’s internet users will use digital payments and that the top 100 million users will drive 70% of the GMV—a clear indicator of the growing importance of the digital consumer.”
BCG senior partner & managing director Alpesh Shah said: “Global digital payments is undergoing rapid transformation and is set to grow four times in value by 2020. India is on an even more exponential growth trajectory. 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 $500Bn by 2020 and non-cash transactions exceed cash transactions by 2023.”
The study, based on Nielsen’s qualitative and quantitative research with over 3,500 respondents, also highlighted that micro-transactions will form a substantial portion of the industry, with over 50% of person-to-merchant transactions expected to be under INR100.
The report predicts that the value of remittances and money transfer that will pass through alternate digital payment instruments will double to 30% by 2020.