S&P Global Market Intelligence on Tuesday said in a report that mobile-based payments will be resilient and overtake card payments in India, as economic slowdown due to COVID -19 will put a pause on the rapid rise of cashless payments in 2020.
According to a report by S&P Global Market Intelligence on Tuesday that payments though mobile payment apps comprising account-to-account transfers and payments made from stored-value accounts, surged by 163% to $287 billion in 2019. “Point-of-sale transactions done using debit and credit cards, including online and in apps, rose 24% to USD 204 billion,” The ‘India Mobile Payments Market Report’ reported. Also, for the first time in 2019, ATM withdrawals are lower than cards and mobile payments based on value. And, for each ATM withdrawal, Indians made more than two transactions using either cards or mobile phones.
According to the report, India’s push towards cashless payments accelerated in 2019, as card and mobile payments as a percentage of GDP rose to 20%in December quarter, from 13% a year earlier.
S&P Global Market Intelligence Fintech Analyst Sampath Sharma Nariyanuri said, “High growth rates in cashless payments seen in recent years are unlikely to repeat amid an economic slowdown due to the coronavirus pandemic.” He further added, “However, we expect mobile payments to be more resilient and to gain a bigger lead over card payments, as their uptake will accelerate due to current social distancing measures and concerns over the usage of cash and plastic.”
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Most payment through apps includes peer-to-peer transactions, mobile phone recharges and utility bills, mobile payments are increasingly becoming a popular payment choice for retail transactions at the point of sale and online.”
S&P Global Market Intelligence estimates that card and mobile payments represented only 21% of USD 781 billion in retail transactions in 2019.
Cashless payment gained after Prime Minister Narendra Modi announced Demonetisation in November 2016 and led to the popularity of mobile-based payments such as wallets and real-time payment system Unified Payments Interface(UPI).
In India, mobile payments services are dependent on Unified Payments Interface (UPI), a banking industry-sponsored protocol that lets people link their bank accounts with their phone numbers through payment apps.
The report further added that Google Pay and PhonePe- UPI based payment apps handled over 7 billion transactions in total, representing more than two-thirds of UPI transactions in 2019. Due to the ongoing pandemic, banks expected to reduce their exposure to unsecured lending; payment apps will have an opportunity to play a mainstream role in providing loans.
It’s expected that the mobile payment market of India to record a CAGR of 22% to reach US$1259449.2 million by 2025.