Hide this You're reading Entrepreneur India, an international franchise of Entrepreneur Media.
Today's Most Read

5 Ways Digital Payments Will Disrupt the Traditional Payment System in India

The user base doubled and has grown drastically post demonetization.
5 Ways Digital Payments Will Disrupt the Traditional Payment System in India
Image credit: Shutterstock
  • ---Shares
You're reading Entrepreneur India, an international franchise of Entrepreneur Media.

Digital payments are touted to be the next big thing in payments in 2017. The tipping point was demonetisation which as accelerated education of masses about UPI and digital payments. The payments market is undoubtedly huge but what’s interesting are the structural changes such as Unified Payment Interface (UPI), demonetisation, and new government tax incentives and efforts to further increase digital transactions in the country. India lacked a social payment story unlike many large economies such as US and China but introduction of UPI created for the first time, the convenience for a peer to peer transaction that matched that of PayPal and other payment systems. This set up the base for social payments category to be created.

Digitally transacting customer base to increase to 300 million by 2020

There are only two types of transactions that people are going to increasingly engage in - Payments with merchants / strangers and Payments with friends / acquaintances. As per recent Google-BCG report, payments market in India will see transactions worth USD 500 Billion by 2020 with P2P payments pegged at roughly USD 50 Billion. The current digitally transacting customer base is set to increase from 60-80 million to 300 million by 2020 and they will comprise 50% of all internet users by 2020. The user base doubled and has grown drastically post demonetisation. User payments frequency has tripled in past one month. The 'Any Bank, Any number' feature has grown 300% month of month. The social engagement on app with likes, comments, GIFs, memes and more increasing. For every payment by a user in a month, he/she opens up the app 15-18 other times as well or non-payment engagement.

Entrepreneur India has been in touch with Ankit Singh, Co-Founder Mypoolin, a mobile P2P and group payments application company to find out how digital payment will disrupt the traditional/cash payment system in India.

Here are the five possibilities -

  1. Social payments - money collection and peer to peer settlement among millennials will be disrupted by applications using UPI and providing more value on top of it. They will completely displace cash and net banking settlements among friends and peers. Social payments make peer to peer payments 10 times simpler and kill awkwardness of uncomfortable ‘You owe me’s among friends.
  2. Offline payments - Merchant adoption of accepting payment methods like Adhaar Pay and BharatQR will change the way merchants accept payments, especially in Tier 2-3 cities and rural areas where there are no PoS machines today.
  3. As merchants start accepting more digital payments, card networks will have to adapt to avoid being left out of the growing payments market. BharatQR is one such initiative.
  4. Indians skipped desktop and smart phone was their first computer. It was the same with credit cards where majority of them skipped it and will adopt UPI as their primary method of payment going forward.
  5. Majority of debit cards issued in the country have been predominantly used for cash withdrawal from ATMs but will now be used by users for carrying out online transactions.
 
Edition: June 2017

Get the Magazine

Get the monthly dose of Entrepreneur delivered to you.
Subscribe Now
OK

This website uses cookies to allow us to see how our website and related online services are being used. By continuing to use this website, you consent to our cookie collection. More information about how we collect cookies is found here.