Key Finding
- A shift in consumer’s payment preference was
noted with the advent of unprecedented situation of COVID-19 wherein
individuals are relying more on online transactions rather than the
traditional medium of cash based transactions.
- Surge in growth of electronic payments in
India, along with rising E-commerce and M-commerce transactions are
further expected to give a boost to numerous entities including payment
gateway service providers and payment aggregators that facilitate online
payments in the country.
- The India M-Wallet market is anticipated to
grow at an exorbitant rate, with a CAGR of 13.7% during the forecast
period FY’21-FY’26.
Digital India
Campaign and Economic Goals: The
government of India has been extensively focusing on “Digital India” campaign
initially launched in 2015 to improve the online infrastructure of the country
to ensure that the government services are made available to citizens
electronically. E-Rupi is one such program developed by Department of Financial
Services (DFS), National Health Authority (NHA) and NPCI, under the broader
“Digital India” campaign formulated in order to enhance cashless payment
transaction for COVID-19 vaccination. As citizens are more concerned for their
health and safety followed by the aftermath of COVID-19, the implementation of
e-RUPI program is a pragmatic development by the government to not only promote
the idea of digital payments but also ensuring safety of citizens as the whole
process is based on cashless transaction without the need of physical payments.
Before the advent of COVID-19, the government of India had set an economic
target of achieving a USD 5 trillion economy by FY’2024-FY’2025, to be driven
by the digitalization of the economy. With policies such as demonetization
being framed since 2016 in order to achieve the digital goals of the
government, emphasis has been on shifting to an online medium of transaction
considered to be hassle free, convenient, transparent and most importantly,
secure form of payment. Adaptation to digital medium of transactions ensures a
greater opportunity for the digital payment services, gateway and security
market in the future.
India
Credit and Debit Card Payments Market: Over the years, money has transformed from coins to physical cash and is
now available in electronic / digital form or plastic cards. Plastic cards for
instance, ATM cards, debit and credit cards are used by customers as an
electronic payment tool, thereby helping in clearing and settling the payment
process. Increasing penetration of credit cards in metro areas coupled with
rising usage of RuPay cards in tier 2 and tier 3 cities are some of the driving
forces in India consumer payments landscape. With recent initiatives and
emphasis by the government in banking the unbanked population, the user base of
debit and credit cards have witnessed tremendous surge in recent years. However
with the advent of COVID-19, the preference of consumers has shifted towards
cashless transaction rather than traditional medium of cash based transactions.
The shift to cashless transaction could prove to be a major downside to the
credit and debit card market in the coming years.
Launch of
New and Innovative Payment Products: The launch
of new and innovative payment products like Unified Payments Interface (UPI),
National Electronic Toll Collection (NETC) FASTag and Bharat Bill Pay Service
(BBPS) have firmly placed the digital payment industry on an upward growth trajectory.
With the surge in adoption of these newer payment methods, global giants such
as Whatsapp, Google and Amazon Pay are aiming to improve their on-platform
transaction convenience to enhance customer retention.
Increased
Mobile and Internet Penetration in India: Increased mobile and internet penetration in the country has resulted in
significant shift towards use of mobile/internet-based payment systems, for
effecting payments for purchase of goods and services. It is estimated that as
of FY’2020, 53% of India’s total population had access to internet from their
mobile phones. Introduction of lightweight acceptance infrastructure (QR codes)
has further facilitated the use of mobile-based payments across the country.
This has led to a larger population accessing digital payment services having
access to convenient payment systems at their disposal. India is ranked second
in the world in terms of active internet users, having merely a 4% internet
penetration rate in FY’2007 increasing to a striking 50% penetration rate of
the overall population as of FY’2020. The gradual increase in internet
penetration rate enables the consumer in accessing digital payment services
such as UPI, m-wallets and QR based transactions among others. With the advent
of COVID-19, consumers are relying on digital payment methods rather than
traditional medium of cash based transactions which are contributing in rise of
contactless payments.
India
Point of Sale (PoS) Terminal Market: PoS terminals were launched as a computerized replacement of cash
register where customers can make an online transaction with the help of their
debit or credit cards. India PoS terminal market is heavily dependent up on the
card acceptance infrastructure consisting of ATMs and PoS terminal devices. In
terms of number of device installations, metro cities dominate India PoS
terminal market majorly due to higher usage and penetration of debit and credit
cards in these cities whereas, non-metro cities were observed to catch up by
spreading awareness regarding PoS devices enabled with Adhaar enabled Payment
System (AePS) and Micro ATMs in rural India. Large retail formats, such as Big
Bazaar, Shoppers Stop and other malls in recent times, have initiated the
process of installing traditional PoS systems that work on GPRS technology.
Integration in the rural region along with lower TIER cities could contribute
in PoS market witnessing massive growth in coming years.
Digital
Incentive as Mentioned in Union Budget 2021: A striking announcement in the Budget 2021 revealed an allocation of Rs
1,500 crore towards MeitY for the promotion of digital payments. Other
incentives such as tax audit exemptions for businesses utilizing digital
payments and the establishment of Fintech hub were also announced. These funds are
expected to be utilized in encouraging digital payments for toll transaction
and investments for marketing campaigns to raise awareness not only in the
urban areas but also rural regions. These incentives exacerbate the opportunity
of various players in the payment services market to integrate into lower tier
cities to expand their presence and to build a robust payment infrastructure in
the country.
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Payment
Security Services: With more
emphasis on technological dependence in recent years, cyber security has
emerged to be a domain of tremendous value. Following the aftermath of
COVID-19, interned adoption rate surged. As physical restrictions were imposed
globally, people started utilizing digital means for communication, work,
shopping etc. The shift to internet domain was not only specific to individuals
but even businesses wherein "Work from Home" became the norm. However
with increased dependence on internet and digital medium, there lies security
concerns related to cyber threats. To enhance security and compliance standard,
governments throughout the world initiated shaping polices and regulations for
strengthening the cyber security ecosystem. With increased dependence on
digital payment mediums, entities, government agencies, organizations, e-commerce
platforms need to ensure that they provide a safe and secure platform for their
consumers for a transparent transaction procedure. India in 2017 ranked among
top five countries to be affected by cybercrime. The rising cybercrime
incidences would ensure Indian entities emphasizing on strengthening their IOT
and cloud security framework in the coming years eventually leading to a growth
opportunity for the payment security services market.
For More
Information, refer to below link:-
India
Payment Services Market Research Report
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Ken
Research
Ankur
Gupta, Head Marketing & Communications
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