A Google and Boston Consulting Group (BCG) study revealed that the Indian digital payment industry will grow to a staggering $500 billion by 2020, a change that will contribute to 15 percent of the nation’s GDP. The report, released on Monday, is based on Nielson’s research from over 3,500 respondents in combination with Google and BCG.
According to the report, the major transformation that is underway will significantly impact the entirety of India’s payment landscape. Of online Indian consumers, the top 100 million users will drive up to 70 percent of digital payments GMV.
The study highlights the growth opportunity in the digital payments sphere in India. The report further projects that by 2020, the size of non-cash—defined as anything from cheques and demand drafts to credit cards and mobile wallets—consumer contributions will nearly double to 40 percent.
In 2016, 81 percent of existing users admitted to a preference for non-cash payment methods. Among the top sectors that users interact with include online shopping, utility bill payment, and movie ticket purchases.
“The digital payments industry is at an inflection point and is set to grow 10 times by 2020,” said Rajan Anandan, VP SEA & India, Google. This, he adds, is a clear indicator of the “growing importance of the digital consumer”.
According to the report, Indian consumers are 90 percent as likely to use digital payments for both online and offline transactions. Money transfers passing through alternative digital payments are expected to double to 30 percent by 2020.
Convenience is the prime factor driving growth. With the explosion of the digital market, users have secure access to everything on the palm of their hands.
“India is on an even more exponential growth trajectory. The smartphone explosion will usher in a new era in digital payments in India over the next few years that will see non-cash transactions exceed cash ones by 2023,” said Alpesh Shah, senior partner & managing director, BCG, India.
The report also identifies the hurdles the ecosystem will have to overcome to reach this potential. It concludes that half of non-users have not adopted the product due to complexity of use, while 61 percent of non-user merchants admitted to the same problem. Other inhibitors to usage include speed of transactions during peak hours and universality of payment acceptance.