Digital payments could account for 71.7% of the total payments volume by 2025, leaving cash and cheques at 28.3%, according to a recent report. Last year, the transaction volume share in India stood at 15.6% and 22.9% for instant payments and other electronic payments, respectively. Paper-based payments had a considerable share of 61.4%, the report said.
More than 70.3 billion real-time payments transactions were processed globally in 2020, a surge of 41% compared to the previous year, as the COVID-19 pandemic dramatically accelerated trends away from cash and cheques towards greater reliance on real-time and digital payments, the report stated.
During 2020, India was ahead of countries such as China and the US. The country processed 25.5 billion real-time payments transactions, followed by 15.7 billion in China, 6 billion in South Korea, 5.2 billion in Thailand, and 2.8 billion in the UK. Among the top ten countries, the US was ranked ninth with 1.2 billion transactions.
By 2025, the share of volume by instant payments and other electronic payments, however, is expected to rise to 37.1% and 34.6% respectively. Leaving the volume of paper-based transactions at 28.3%. Furthermore, by 2024 the share of real-time payments volume in overall electronic transactions will exceed 50%.
The report also estimated that by 2024, the share of real time payments volume in overall electronic transactions will exceed 50%. An industry expert explained that India’s journey of creating a digital financial infrastructure can be characterised by collaboration between the government, the regulator, banks, and fintech. This helped advance the country’s goal to achieve financial inclusion and provide rapid payment digitisation. The pandemic has further accelerated digital payment adoption with many first-time users adopting electronic payment systems.
A news report noted that India’s digital payments market surged during the pandemic even as incentives such as cash backs, rewards, and offers helped businesses to attract more customers. Moreover, policy frameworks such as Pre-Paid Instruments (PPI), Universal Payment Interface (UPI) by the NPCI apart from Aadhar, and the launch of BHIM-app have driven the financial inclusion and improved the payment acceptance infrastructure in the country in the past few years.
As the industry evolves, it is estimated that economies will witness increased adoption across different users and volume growth will be driven by recurring payments, transit payments, and cross-border transactions. As the pandemic continues to drive changes in consumer and business behaviours, banks, merchants, and intermediaries across the payment ecosystem are responding rapidly, prioritising the shift to digital platforms to protect current revenue streams, and search for new ones through a fully digitised customer experience.
With millions of people globally having to change the way they work and live – and the way they shop and pay – mobile wallet adoption rose to a record high of 46% in 2020, up from 40.6% in 2019 and 18.9% in 2018. Countries like Brazil, Mexico, and Malaysia where many people historically relied on cash are now some of the fastest adopters of mobile wallets. An official said that the pandemic has cast the spotlight on the importance of digital payments and robust payment infrastructures, condensing a decade of anticipated innovation into one year and creating human behavioural changes that will not reverse as the world emerges from the crisis.
