Digital PaymentsTechnology For SMEs

Worldline Published ‘India Digital Payments Report’ Q2 2022

The report highlights the analysis of the transactions available in public databases as well as processed by Worldline India in the second quarter (April – June 2022) and derived some unique insights.

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Worldline India has released the ‘India Digital Payments Report’ for Q2 2022. The report highlights the analysis of the transactions available in public databases as well as processed by Worldline India in the second quarter (April – June 2022) and derived some unique insights.

How India Pays?

In Q2 2022, 20.57 billion transactions in volume and INR 36.08 trillion in terms of value was processed through Debit and Credit cards, Prepaid Payment Instruments like mobile wallets and prepaid cards, and UPI which includes P2M (person to merchant) and P2P (person to person) transactions.

UPI P2P accounted for 49% in volume and 67% in value but in terms of merchants transactions, UPI P2M emerged as the preferred payment mode with a market share of 34% in volume and 17% in terms of value. Payments through credit and debit cards accounted for 8% in volume and 14% in value. While UPI remains a dominant payment mode, adoption of credit cards is growing at a healthy pace it remains the preferred mode for high ticket size transactions.

Speaking on the release of the report, Ramesh Narasimhan, Chief Executive Officer – India, Worldline, said, “2022 is another momentous year for the payments space in India. We are successfully sailing through the aftermath of Covid-19, the total cards in circulation has breached 1 billion mark, UPI is tracking over 6 billion transactions per month, about 53 million FASTags have been issued, and over 20k billers are live on Bharat BillPay ecosystem.

This demonstrate a robust payment’s ecosystem which is built to serve the diverse and growing needs of Bharat. We are glad to share our India Digital Payments Report Q2 2022 which captures key trends in the payment world and showcasing a double-digit growth across almost all payment platforms. We also highlights our view on what the RBI’s Vision 2025 means for Digital Payments in India.”

Unified Payment Interface (UPI)

In Q2 2022, UPI clocked over 17.4 billion transactions in volume and INR 30.4 trillion in terms of value. Transactions volume and value have seen an increase about 118% increase in volume and over 98% increase in value in Q2 2022 as compared to Q2 2021.

In Q2 2022, the top remitter banks were State Bank of India, HDFC Bank, Bank of Baroda, Union Bank and ICICI Bank. The top beneficiary banks were Paytm Payments Bank, Yes Bank, SBI, Axis Bank and ICICI Bank.

However, it should be noted that most transactions are being driven by Third-Party applications riding on the rails of these banks; in Q2 2022, the top UPI Apps in terms of volume were PhonePe, Google Pay, Paytm.

The Average Ticket Size (ATS) for UPI P2P transactions was INR 2425 and for UPI P2M transaction was INR 820 as of June 2022.

UPI was launched in April 2016 with 21 partner banks and as of now, the number has increased to 346 banks are part of the UPI ecosystem. It is now accepted in countries like UAE, Singapore, France and Bhutan.

What could be a game-changer for UPI transactions will be linking credit cards on to the platform – it is currently only Rupay but could increase going forward – and this could further supercharge UPI transactions, especially in terms of P2M average ticket sizes.

The government has also reiterated that UPI is a public good and that it is not considering levying any charges for UPI services. Companies have sought access to UPI data, says RBI Deputy Governor. As of June 2022, total number of UPI QRs stood at 195.17 million, an increase of 92% compared to June 2021.

 Merchant Acquiring

As of June 2022, the total number of POS terminals deployed by merchant acquiring banks was 6.59 million; it increased by 43% growth in Q2 2022 compared to Q2 2021.

Overall, private sector banks represented about 74% of the POS terminal market while public sector banks accounted for 18%. Payments banks accounted for 7% market share and foreign banks continue to represent a 1% share.

Top POS deployers: HDFC Bank, Axis Bank, ICICI Bank, State Bank of India, RBL Bank, Paytm Payments Bank, IndusInd Bank, Kotak Bank, Yes Bank, Canara Bank are the top acquiring banks with significant market share in terms of POS deployment.

Worldline In India Insights

In Q2 2022, frequently visited physical merchant categories like grocery stores, restaurants, clothing and apparel, pharmacy and medical, hotels, jewellery retail, specialty retail, household appliances and departmental stores together accounted for over 61% in terms of volume and about 58% in terms value.

In the online space, e-commerce (shopping for goods and services), gaming, utility and financial services contributed to over 86% transaction in terms of volume and 47% in terms of value.

Education, Travel, Hospitality & Government sector contributed remaining 14% transactions in terms of volume & 53% in terms of value.

States and cities with the highest number of transactions at physical touch points in Q2 2022 for Worldline India are – 

Top 10 states: 1. Maharashtra 2. Tamil Nadu 3. Karnataka 4. Andhra Pradesh 5. Kerala 6. Gujarat 7. Delhi 8. Uttar Pradesh 9. Telangana 10. West Bengal

Top 10 cities: 1. Hyderabad 2. Bengaluru 3. Chennai 4. Mumbai 5. Pune 6. Delhi 7. Kolkata 8. Coimbatore 9. Ahmedabad 10. Vadodara

Card Issuance

The total number of credit and debit cards in circulation by end of Q2 2022 was 1 billion. While the number of credit cards increased by 25% from 62.81 million in June 2021 to 78.7 million in June 2022, debit cards increased by 2% from 906 million to 921.75 million during the same period; this could however be the base effect as well as account cleanups by banks which is highlighted by the number of cards falling in early 2022.

As of June 2022, top credit card issuing banks were HDFC Bank, SBI, ICICI Bank, Axis Bank and RBL Bank while top debit card issuing banks were SBI, BOB, Union Bank, Punjab National Bank and Canara Bank

Transaction analysis of Credit cards

In Q2 2022, Credit cards volume and value stood at 688.65 million and INR 3.28 trillion respectively. The number of credit card transactions at POS accounted for 358.35 million while e-commerce transactions was 330.30 million. In terms of value, consumers transacted INR 1226.29 billion at POS terminals and INR 2053.66 billion at ecommerce via credit cards in Q2 2022.

Even though credit cards volume at POS and e-commerce are nearly equal, value of e-commerce transactions is higher as compared with value of transactions at POS. This is in line with the general trend of transactions of high ticket items moving from the physical to the digital space.

Industry participants are expecting further tailwinds in credit card spends with the onset of the festive season, where spends typically remain at an elevated level. Many issuers have lined up special offers on credit cards to boost festival spending and going by recent trends, they expect a promising festive season. The RBI is also ensuring that cardholders feel secure when transacting online by mandating tokenization of all card numbers.

Transaction analysis of Debit Cards

In Q2 2022, debit card transactions volume and value stood at 973.12 million and INR 1.91 trillion respectively. Out of the total debit card volume, transactions at POS were 629.48 million and ecommerce were 343.64 million. In terms of value, INR 1.28 trillion was processed at POS terminals while INR 642.12 billion was processed at e-commerce via debit cards. Indians are getting more comfortable to make online purchases via credit cards for big ticket size transactions while debit cards are more frequently used for small ticket size purchases at physical touchpoints. Value added services like EMI, BNPL are enabling customers to opt for high value products and services using their cards.

Prepaid Payment Instruments

In Q2 2022, total prepaid cards transactions volume and value was 412.29 million and INR 206.36 billion respectively. Transactions at POS accounted for 34.93 million while transactions through ecommerce were 377.56 million. In terms of value, prepaid cards at POS processed transactions were worth INR 58.20 billion while INR 148.16 billion was processed through ecommerce. The prepaid card industry grew rapidly with fintechs and their innovative offerings but there has been a pause of late because of the recent RBI mandate on prepaid cards – it would be interesting to see how the industry pivots to this. 

Transaction analysis of Mobile Wallets

In Q2 2022, the number of transactions through mobile wallets was 1.52 billion and the value was INR 574.64 billion. This includes purchase of goods and services and fund transfer through wallets. Transactions through wallets are growing steadily recording an 38% increase in volume and 27% in value when compared to Q2 2021.

National Electronic Toll Collection

In Q2 2022, NETC processed about 829 million transactions worth INR 129 billion. The transactions volume increased by 89% while value increased by 72% as compared to Q2 2021. As of March 2022, the total number of banks live with NETC FASTag were 36 while about 52.9 million NETC FASTags have been issued since the inception of the NETC program. NETC FASTag continues to grow, and new use cases are coming up such as payment at parking plazas at malls, metro stations, hospitals, airports among others; apart from acceptance across national and state highways. Currently, over 40 parking plazas across the country accept FASTags for parking fees in over 20 major cities.

Top issuer & Acquirer banks for FASTags as of March 2022:

Top 5 Issuer Banks – ICICI Bank, IDFC Bank, Paytm Payments Bank, Airtel Payments Bank and Kotak Bank

Top 5 acquirer Banks – IDFC Bank, ICICI Bank, Paytm Payments Bank, Axis Bank and HDFC Bank.

Bharat BillPay

The transactions volume passing through Bharat Bill Payment Central Unit (BBPCU) in Q2 2022 stood at 238.31 million while the transactions value was INR 403.02 billion. It registered a growth rate of 99% and 108% in volume and value respectively as compared with Q2 2021.

As of June 2022, top 5 BBPOUs based on Billers on-boarded were Axis Bank, ICICI Bank, Kotak Mahindra Bank, Infibeam Avenues Limited and India Ideas Com Ltd. Axis Bank had onboarded 19,399 billers followed by ICICI Bank with 18,016 billers in June 2022. Bharat Bill Pay caters to about 20 categories like Education, Loan Repayment, Insurance, FASTag recharge, Housing society, Credit cards, Subscription, Hospitals, Clubs and associations, Electricity, Water and Municipal Taxes, LPG gases, Piped Gas, DTH, Mobile prepaid, postpaid, broadband postpaid and cable etc. Out of these, Electricity, FASTag recharge, Mobile Postpaid contributed to 70% share in volume and 66% in value in June 2022. There are over 932 Agent institutions BBPOUs live on Bharat BillPay.

Aadhaar Enabled Payment Service

In Q2 2022, AePS transactions recorded a substantial volume of over 679 million transactions, registering about 38% growth over Q2 2021. It processed transactions worth INR 913 billion, an increase of 28% over Q2 2021. AePS is a bank led model which allows online interoperable financial inclusion transaction at PoS (MicroATM) through the Business correspondent of any bank using the Aadhaar authentication.

SMEStreet Edit Desk

SMEStreet Edit Desk is a small group of excited and motivated journalists and editors who are committed to building MSME ecosystem through valuable information and knowledge spread.

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