Unfolding Of 2021 For the Fintech Sector For a significantly long period of non-touch, everything meant growth continued for the sector

The year 2020 has been like no other. In many ways, demonetization was seen as a key event in India's rapid digital payments growth. In hindsight, that seems like a trailer. At the same time, the real movie unfolded in 2020, one of the rare industries that truly benefited from the tailwinds of the forced lockdown due to the pandemic. For a significantly long period of non-touch, everything meant growth continued to persist.

India had the perfect storm in the making, starting with the demonetization in 2016. It further fuelled the need for new and efficient payment methods followed by a rollout and rapid scale-up of UPI over the three-four years, the policy intervention to make merchant discount rate (MDR) zero for accepting payments over UPI and RuPay as part of a budget announcement, really acted as the tipping point for the astronomical growth of the sector.

It has not been only about payments; macro factors like the rollout of GST acted as a catalyst to nudge small merchants across several categories to get formalized. It became part of the formal financial mainstream, something that was unthinkable a few years ago due to the fear of coming under the tax net. The government's massive push around creating awareness and incentive for promoting digital payments has been one of the cornerstone policy measures delivered in 2020.

While the house is divided in terms of Zero MDR affecting the ability to scale, we have seen the mushrooming of several new fintech that has scaled on the back of new and creative business models. All the while keeping the Zero MDR a central acquisition strategy and the pandemic has become the perfect recipe to scale these businesses. Besides the rise of interest coupled with big dollars deployed by mega tech companies, there has never been a dull moment for India's payments businesses in 2020; the sector demonstrated the perfect V-shaped recovery in days and weeks.

Year 2021 will be all about consolidation and innovations in the payments sector; we believe in the next 12 months, there will be a massive push for several categories

• Transportation space will see a huge leg-up with new products around toll, transit, parking, all vying for efficient products as latent demand has picked up
• New and innovative affordability options like 'buy-now-pay-later' will become mainstream, with more players offering the same
• Cross-border payments for consumer and businesses will see the renewed focus and rollout of newer products around UPI
• The ensuing roll out of WhatsApp at scale will trigger a new wave of UPI adoption
• In the new fiscal, credit-led payment products will see a major push with the scars of moratorium behind