India's growing digital payments market is expected to grow over three-folds to Rs 7,092 lakh crore by financial year 2025 on the back of government policies around financial inclusion and growing digitisation of merchants, reveals a research report. The country's digital payment market was worth around Rs 2,162 lakh core in 2019-20, RedSeer Consulting said in its report.
"The current 160 million unique mobile payment users will multiply by 5 times to reach nearly 800 million by 2025. This growth will be driven by a number of demand and supply-side drivers," the Bengaluru-based management consultancy said.
COVID-19 pandemic is being seen as a catalyst to digital payments across India. Other factors such as the rise of digital commerce, innovations in payments technology using Artificial Intelligence, the Internet of Things (IoT), real-time payments and the introduction of mobile point of sale (POS) devices also played a key role in growth of digital payments market in India.
"COVID-19 seems like another demonetisation-like catalyst for the industry. Digital payment providers have been quite hands-on in terms of responding to this situation, by offering enhanced support on essentials such as offering groceries, masks, sanitisers, COVID-19 insurance, offering integration with donations to PM fund and other essential product and services," RedSeer Consulting founder and CEO Anil Kumar said.
As per the report, mobile payments will drive around 3.5 per cent of total digital payments of Rs 7,092 lakh crore by FY25, up from the current 1 per cent. The total mobile payment users who currently stand at about 162 million would reach around 800 million during this period, it said.
The report stated that wallets will continue to play a key role in its growth with the continuous increase in both frequency and user base. By 2025, wallets are expected to have a higher penetration and lower-income would eventually drive multiple small-ticket transactions, it said.
RedSeer report showed that digital payments share of grocery stores rose to 75 per cent due to COVID-19 as people preferred paying through mobile phone due to safety concerns.
As per the report, the payment gateway aggregator market in India, which is currently estimated to be at Rs 9.5 lakh crore, is expected to grow by 2.4 times driven by large value transactions. It is expected to grow at a compounded annual growth rate of 19 per cent in the next 5 years to reach Rs 22.6 lakh crore by FY25.
"The payment gateway market today is very competitive, and all leading players are fighting for the market share. Paytm leads this pack and has grown the fastest followed by BillDesk with marquee government clients," the report said.
With PTI inputs