1st Time Ever, Mobile Payments Beat Credit Card Payments In India! How This Happened?
The story of digital payments in India is quite an intrinsic one. There has been a lot of factors that have contributed to bringing India where it is today. Demonetization propelled it, the pandemic boosted it and now the tree has so big that it started to overpass the age-old credit cards in terms of payments.
Mobile Payments surpass payments through
According to the 2021 India Mobile Payments Market Report, Mobile payments in India are now growing faster than card payments as more consumers and businesses adopt digital payments amidst the pandemic. Payments made via apps that bypass credit cards rose 67 percent to $478 billion in 2020. And they are clocking more than $1 trillion in annualized value in 2021.
“…we expect mobile payments to continue to grow faster than cards due to a growing consumer preference to use smartphones to pay,” said the report. The report is published by S&P Global Market Intelligence’s Financial Institutions Research team.
On the contrary, credit card transaction value in the industry dropped by 14 percent in fiscal 2021.
“Mobile payments in India accelerated their lead over cards amid the Covid-19 pandemic. Large technology companies intermediating mobile payments are becoming financial supermarkets by cultivating partnerships with financial institutions and securing regulatory licenses,” the report read.
Demand for Cash is slowing
The report noted that demand for cash is slowing in the wake of rising mobile payment adoption. For each ATM withdrawal, Indians made 3.7 transactions using mobile phones in 2020. The report has also forecasted that there continues to be room for rapid growth in digital payments in India in the next few years.
According to the report, based on a review of instant payments in four large Asia-Pacific economies of Singapore, Australia, and Thailand, India processed the highest number of real-time transactions in 2020.
Indian mobile payments market is dominated by PhonePe and Google Pay. These will continue to dominate mobile payments, the report said. Still, it does not expect India’s mobile payments market to become a duopoly like in mainland China, where Alipay and WeChat process a huge chunk of payments.
If this trend continues, very soon RBI might stop printing money altogether, don’t you think so?