In what has only re-affirmed a well established fact, that digital payments are set to revolutionise the way India pays and transacts, a Google-BCG report sent to us, has revealed that digital payments will be a humongous $500 Billion market by 2020, comprising of 15% of India’s GDP.
The report is based on Nielsen’s qualitative and quantitative research with over 3,500 respondents, combined with BCG and Google’s industry intelligence.
Google-BCG’s latest report projects, that by 2020, the size of digital payments industry in India will be $500 billion; contributing 15% to India’s GDP. Further, by 2020, non-cash* contribution in the consumer payments segment will double to 40%. Already 81% of existing digital payment users prefer it to any other non-cash payment methods. Online shopping, payment of utility bills and buying movie tickets have emerged as the three top things that a user primarily interacts with.
Further, the reports reveals that 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.
Rajan Anandan, VP, SEA & India, Google gave more insights on the same,
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.
Based on the research conducted, convenience — pretty much implied — has emerged as the most important factor that is driving this growth. This is followed by availability of offers while opting for digital payment methods.
The report also highlights that micro-transactions will form a substantial portion of the industry, with over 50% of person-to-merchant transactions expected to be under INR 100. The report predicts that the value of remittances and money transfer that will pass through alternate digital payment instruments will double to 30% by 2020.
The report identifies various challenges that the digital payments ecosystem will need to overcome in order for the industry to grow to its potential. The research has shown that 1 of 2 non-users haven’t used digital payments because they found the product too complicated to understand and 61% of non-user merchants find it complex to use.
For the purpose of the study, Nielsen conducted 14 group discussions, and 26 In-depth interviews for users and merchants in 3 cities (Mumbai, Lucknow, Delhi), and inputs from these were then used to form a comprehensive consumer and merchant quantitative survey. The consumer survey covered over 3,500 respondents (digital consumers – 1,516, remittance users – 917 and merchants – 917), across nine geographies – Delhi, Mumbai, Bangalore, Ludhiana, Lucknow, Indore, Surat, Vishakapatnam and Coimbatore.
Additionally, universality of acceptance of digital payment methods and merchant concerns around speed of transactions during peak hours have emerged as other inhibitors to usage.