Industry experts are believing that the industry is going to witness massive expansion in the financial technology (FinTech) sector, India’s digital payments transaction value is projected to more than double to USD 135.2 billion in 2023 from USD 64.8 billion this year, according to an ASSOCHAM-PWC India study.
“India is expected to clock the fastest growth in digital payments transaction value between 2019 and 2023 with a compounded annual growth of 20.2 per cent ”, the study said. Though on a smaller base, Indias CAGR of over 20 per cent is ahead of China with 18.5 per cent and the US 8.6 per cent.
It said India’s share of the worldwide transaction value of digital payments is also set to increase from 1.56 per cent to 2.02 per cent in the next four years.
“The rise of digital commerce, innovation in payments technology using Artificial Intelligence, the Internet of Things (IoT) , real-time payments; and the introduction of mobile point of sale (POS) devices have led to a reduction in the cost of acceptance infrastructure and also contributed to the growth of digital payment,” the latest ASSOCHAM-PWC publication said.
Listing the enabling factors for growing electronic payments, the study stated that regulatory efforts and the early successes of wallets of non-banking players played catalyst role in enhancing the digital landscape in the country in the last three years, with lot more traction coming in the past one year.
“This has helped transform the competitive digital payments landscape in India to include telecom players, banks, wallet companies and retailers (e-commerce)”.
Going forward, the key growth driver for digital payment would be inter- operability between the Pre-Paid Instrument (PPI) players, whose number has reached almost 50 in India.
As of today, the customer and the merchant must have a common PPI operator to make the transaction happen. However, with inter-operability, such a hindrance can be removed, enabling users to make payments at any and all digitally- enabled merchant outlets without the need to possess the same wallet platform.
”What makes interoperability possible is the UPI (Unified Payment Interface) which allows users possessing accounts in different banks to transact with each other in real time. With wallet interoperability, this platform can be leveraged to facilitate easier mobile wallet transactions, thus paving the way for a more connected peer-to-peer merchant network”, they study said.
Though India is growing at the fastest pace, it is China which is the market leader in terms of overall value of transactions of USD 1.56 trillion.