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Google-BCG report pegs Indian digital payments industry at $500 billion by 2020
According to the projections made in a recent combined report from Google and Boston Consulting Group (BCG), the size of digital payments industry in India will be $500 billion; contributing 15% to India’s GDP by 2020.
Based on Nielsen’s qualitative and quantitative research with over 3,500 respondents, combined with BCG and Google’s industry intelligence, the report “Digital Payments 2020” provides a comprehensive overview of the current transformation underway in digital payments and its impact on the overall payment landscape in India.
Some key takeaways from the report are:
- The size of digital payments industry in India will be $500 billion by 2020.
- More than 50% of Indian internet users will use digital payments by 2020. Top 100 million users will drive 70% digital payments GMV (gross merchandise volume).
- By 2020, non-cash contribution (cheques, demand drafts, net-banking, credit/debit cards, mobile wallets and UPI) in the consumer payments segment will double to 40%.
- Online, shopping, payment of utility bills and buying movie tickets have emerged as the three top things that a user primarily interacts with.
- Indian consumers, are 90% as likely, to use digital payments for both online as well as offline transactions. Over 60% of digital payments value will be contributed by offline points of sale such as unorganized retail, eateries, transport etc.
- Micro-transactions to form a substantial portion of the industry, with over 50% of person-to-merchant transactions expected to be under Rs. 100.
- The value of remittances and money transfer that will pass through alternate digital payment instruments expected to double to 30% by 2020.
“Spurred by smartphone penetration, and supported by progressive regulatory policy, the digital payments industry is at an inflection point and is set to grow 10X by 2020. It is telling that half of India’s internet users will use digital payments and that the top 100 million users will drive 70% of the GMV—a clear indicator of the growing importance of the digital consumer”, Rajan Anandan, VP, SEA & India, Google said.
According to the research, “convenience” has emerged as the most important factor driving this growth, followed by availability of offers while opting for digital payment methods.
The report has also identified the various challenges that the digital payments ecosystem will need to overcome in order for the industry to grow to its potential which includes difficulty in understanding the product, along with the universality of acceptance of digital payment methods and merchant concerns around speed of transactions during peak hours have emerged as other inhibitors to usage.
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