Mobile payments and card transactions exceeded cash withdrawals from automated teller machines (ATMs) for the first time in 2019, indicating that the country’s push towards digital payments was bearing fruit, according to S&P Global Market Intelligence’s 2020 India Mobile Payments Market Report.
Mobile payments, initiated by payment apps comprising account-to-account transfers and payments made from stored-value accounts, rose 163% to $287 billion in 2019. By comparison, point-of-sale transactions completed using debit and credit cards, including online and in apps, rose 24% to $204 billion, S&P said. Card and mobile payments as a percentage of GDP rose to 20% in the quarter ended December 31, 2019, S&P said, adding that India ranked favourably among countries that built instant payment schemes, processing at least five times more transactions than the second-largest market based on an analysis of real-time payment volumes.
‘High growth unlikely’
“High growth rates in cashless payments seen in recent years are unlikely to repeat amid an economic slowdown due to the novel coronavirus pandemic,” said Sampath Sharma Nariyanuri, fintech analyst at S&P Global Market Intelligence.
“However, we expect mobile payments to be more resilient and will gain a bigger lead over card payments, as their uptake will accelerate due to ongoing social distancing measures and concerns over usage of cash and plastic.” The report estimated that card purchases and Unified Payments Interface (UPI)-led mobile payments represented 21% of the $781 billion in in-store transactions in 2019.
Google Pay and PhonePe led the UPI payment space as the two handled more than 7 billion transactions in total, representing more than two-thirds of UPI transactions in 2019.
“Google and Amazon are already offering a far greater breadth of payments in India than in other large markets such as U.S., Germany, U.K. and Japan. With the expected entry of Facebook’s WhatsApp, U.S. technology companies will extend their dominance in India,” it said.
“In the absence of a clear path to profitability, consumer-facing technology firms such as Paytm and PhonePe will continue to need investor support to fuel their expansion plans,” the report’s authors added.
