Digital payments in India are flourishing at an astounding rate, boasting an annual growth rate of 12.7% in the amount of digital transactions, The Economic Times reports.
According to a report by global advisory company KPMG published on Thursday, the introduction of mobile payments in the country has resulted in a cast number of retailers and merchants abandoning cash for digital methods of payment, with close to 1.5 million digital payment acceptance locations in 2016-17.
Within two to three years, the number of merchants accepting digital methods of payment has jumped to over 10 million.
“The mobile payment revolution with its evolving form factors has led to a boom in the number of merchants adopting digital payments. From close to 1.5 million digital payment acceptance locations in 2016-17, the number of merchants accepting digital payments modes has increased to over 10 million, in a short span of two to three years,” the report entitled ‘Fintech in India – Powering mobile payments’, stated.
The popularity with cashless payments among merchants has been boosted by QR-code based wallet acceptance points with reduced costs for setting up. These have been fundamental in driving the mass adoption among retailers in the country. In turn, this has heightened customer efficiency and convenience, formulating a smooth-sailing cycle for the ecosystem, the report stated.
One of the determining factors which has proven to be instrumental in launching mobile payments in India is wallet players. Wallets offer facilitated payments, convenience and are commonplace, making them one of the most extensively used forms of payment.
The reported added that the mobile wallet market’s rise is due to persist, at an annual growth rate of almost 52.2% by volume expected during 2019-2023.
Unified Payments Interface (UPI) – based real time payments – is another key factor which has contributed to the next trend of digital payments. During the period stretching from 2016-2017 to 2018-2019, the number of UPI transactions hiked at an annual growth rate of 246%.
Other aspects including inter-operability, and the ability to originate across different platforms such as digital wallets are also lifting the growth in UPI transactions.
Over the past five years, mobile payments have undergone vast changes, with the expansion of payments such as UPI, mobile wallets, Bharat Interface for Money (BHIM), BharatQR and Unstructured Supplementary Service Data (USSD), the report said.
In its ‘2021 vision document’, the Reserve Bank of India forecasts a 50% surge in mobile transactions. A number of supporting attributes can be linked to the growth, including a strong payment infrastructure, accessibility of structured data, evolution of form factors, change in consumer sentiment and behaviour and the government’s dream to shift India to a completely cashless society.
The report also revealed that feature phones were limited to USSD, the arrival of smartphones and the Internet has paved the way for easy access to payment technologies.