In the past few years, the payment acceptance infrastructure has improved, propelling market expansion. The introduction of digital payment portals by banks such as Axis Bank Ltd., HDFC Bank Ltd., and ICICI Bank Ltd has aided the development of e-payment solutions. Integration of payment services by telecommunication firms such as Airtel, Google, and MobiKwik for online transactions also helped in the process.

E-payment Solutions Market insights

In FY 2021, the market witnessed 43.71 billion transactions. It is expected to reach 649.70 billion by FY 2027, expanding at a compound annual growth rate (CAGR) of ~59.57% during the FY 2022 – FY 2027 period. The value of e-payment transactions is expected to expand at a CAGR of ~24.64% during the forecast period.

Technological advancements such as internet banking and contactless payments, along with improved internet connectivity, propel e-payment methods. Integration of payment services with popular non-banking mobile applications such as WhatsApp, Apple Pay, Amazon Pay, and Ola Money have made these payment options popular among millennials.

Segment Insights

The market can be segmented on the basis of types of payment methods – Real Time Gross Settlement (RTGS), Retail Electronic Clearing, and Cards. RTGS acquired the highest market share in terms of value throughout FY 2021. In terms of volume, retail electronic clearing held the highest market share, followed by card payments and RTGS.

The total volume of retail electronic clearing expanded at a CAGR of ~49.29% during the FY 2019 – FY 2021 period. Retail electronic clearing comprises different modes of transactions such as  (NEFT), Immediate Payment Service (IMPS), and National Automated Clearing House (NACH). Cards include payment via debit and credit cards.

COVID-19 Impact Analysis

The value of e-payment transactions decreased in 2020 due to reduced business activities and lowered the annual income of people, while the volume increased significantly. In the wake of the pandemic, the National Payments Corporation of India (NPCI) encouraged customers and providers of emergency services to adopt digital payment systems to ensure safety of contactless transactions.

It launched e-RUPI, a one-time contactless, cashless voucher-based mode of payment, which helps users redeem a coupon without a card, digital payments app, or access to internet banking. Digital transactions using UPI increased by 1.8 times of what it was before COVID-19 and is exhibiting steady growth even during Q2 FY 2022.

However, the market witnessed slow growth in terms of value because several major sectors such as cross-border payments, travel, and hospitality/tourism, which operate through e-payments, were affected.

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The post E-payment Solutions Market in India 2021 first appeared on CRI Report.

E-payment Solutions Market in India

Market insights:
The development of digital infrastructure in the country is leading to the creation of a robust technological ecosystem for the digital payments industry of India. The e-payment solutions market in India is anticipated to expand at a compound annual growth rate (CAGR) of ~51.17% between FY 2018 and FY 2023, and will reach a value of INR 15,344.1 Tn by FY 2023.

The volume of payments is expected to reach 96.5 Tn transactions by FY 2023, up from its 2018 volume of 18.5 Tn. The growth of the Indian e-payment solutions market is owed to the introduction of digital payment portals by banks like Axis Bank Ltd., HDFC Bank Ltd., ICICI Bank Ltd., etc. Also, the integration of payment services in popular applications like WhatsApp and Apple Pay has led to an increase in digital payments across India.

Segment wise market insights:
During the FY 2016-FY 2018 period, the use of credit cards for online payments has reduced (54% to 43%), while the market share of prepaid payment instruments (PPI) has increased (11% to 13%). This implies that there has been a shift in the preference for payment methods, from cards to digital platforms, thus leading to the higher penetration of e-payment solutions in India.

Key growth drivers of the market:
o After the demonetization of INR 500 and INR 1,000 notes in 2016, India’s fintech (financial technology) landscape witnessed significant adoption among users from across various business segments. This, in turn, led to the growth of the e-payment solutions industry, resulting in an annual return on investment of ~29% in India, which is higher than the average returns in the global and Asian markets.

o E-commerce retailers like Amazon, Flipkart, and Paytm Mall offer cashbacks and discounts on online payment for products. This encourages customers to use digital payment services more often during online shopping. As a result, the transaction value and volume of the e-payment solutions market in India is increasing.

Key deterrents to the growth of the market:
The underdeveloped infrastructure of Indian fintech companies, such as ineffective payment systems, limited Internet coverage, and lack of proper regulatory mechanisms for payment obligations, are slowing down the penetration of digital payments in the country. Also, the penetration of digital payment solutions is limited to urban and semi-urban clusters, and cash is still the preferred mode of payment beyond those areas.

Market trends:
o The deployment of QR code technology for payments at merchant outlets, acts as a substitute for NFC (near-field communication) devices or EDC (electronic data capture) machines, thus eliminating the cost barrier in the merchant acquisition process.

o UPI is a revolutionary platform for easy interoperability of payments, which is structured keeping the prevailing challenges in mind, in order to generate larger volumes of payments in the future. Several third-party service providers have provided easy access to new customers to the UPI platform through their smartphone applications.

Companies covered:

o Airtel Payments Bank Limited
o Axis Bank Limited
o HDFC Bank Limited
o ICICI Bank Limited
o Mswipe Technologies Private Limited
o National Payments Corporation of India
o One Mobikwik Systems Private Limited
o One97 Communications Limited
o PayPal Payments Private Limited
o State Bank of India

The post E-payment Solutions Market in India (2018-2023) first appeared on CRI Report.