5 Ways Digital Payments Will Disrupt the Traditional Payment System in India The user base doubled and has grown drastically post demonetization.

By Baishali Mukherjee

Opinions expressed by Entrepreneur contributors are their own.

You're reading Entrepreneur India, an international franchise of Entrepreneur Media.

Shutterstock

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.
Baishali Mukherjee

Former Freelancer

Related Topics

Leadership

International Security Firm Welcomes Female India Native to an Essential Leadership Position

Yasmin Brar has been appointed as the Operations Strategy Director, a role that underscores the company's commitment to innovation, expansion, and strategic management

News and Trends

Zydus Wellness: Leveraging FMCG Trends To Turn Around Tables

Price-pack architecture, e-commerce, Internet first brands and increased penetration in smaller pockets, are the current focus of the company

Business Ideas

55 Small Business Ideas to Start in 2024

We put together a list of the best, most profitable small business ideas for entrepreneurs to pursue in 2024.

Money & Finance

How to Know If Your Business Is Profitable This Very Second

It's important to periodically take stock of your business status, but don't wait until the end of the quarter or Tax Day to know. Too many decisions you need to make depend on your profitability. Here are things you should be doing regularly so that when you need to know where you stand, you know.

Branding

6 Tips for Successfully Communicating Your Personal Brand

Follow these simple guidelines to stand out from the crowd and effectively broadcast your own personal brand to the world.

Marketing

5 Ways ChatGPT Will Impact Digital Marketing

ChatGPT is creating ripples across the digital landscape right now. Here are five ways it can benefit your ads, campaigns and marketing strategies.