Demonetization may have helped shift India’s payments ecosystem toward digital channels.
But it is the pandemic that is serving as steady tailwind — boosting the country’s momentum.
To that end, Tufts University’s Fletcher School, in collaboration with Mastercard, said that India is fourth in “momentum” among 90 economies ranked at the end of last year.
That comes as the country was ranked 32 in terms of “digital trust.”
In other words, there’s still a way to go. But, as the Digital Evolution Scorecard issued by Fletcher noted, India takes its place among “break out economies,” which are described in the report as “lower scoring in their present states of digitization but are evolving rapidly.” The study went on to note that such economies’ “significant headroom for growth would make them highly attractive to innovators and investors.”
The breakout economies that succeed will be those that have broadened mobile access, and improving device and broadband availability will be key, noted the report. In the meantime, the continued ravages of the coronavirus are forcing all economies to transition to education, commerce, and all manner of daily life toward digital options.
Increasing Consumer Use Of Digital Payments
As PYMNTS reported earlier this month, there are other efforts afoot to track India’s digital efforts nationwide. In one example, the Reserve Bank of India announced that it is rolling out its Digital Payments Index, aimed at tracking the growth in cashless transactions done domestically.
The bank said the index, weighted across five parameters, will “capture the extent of digitization of payments across the country” on a semi-annual basis The index components will include payment enablers; infrastructure (including bank branches, ATMs and QR codes); and payment performance. Coming off a March 2018 “base,” we find that initial reading for the index is 207.8, indicating significant growth (denoted by readings above 100).
Drilling down into payments data, the National Payments Corporation of India (NCPI) reported this week that about one-third of Indian households use digital payments — a number that can easily go up to 50 percent.
“While one of two of India’s richest 20 percent households use digital payment, as many as one out of four households in the poorest 40 percent also use it,” the report stated.
As to the potential: The NPCI said that “through effective training and education,” more than half of all Indian households (54 percent or 151 million households) will become digital payment users. Breaking that down, the data show that 55 million of these households will come from the poorest 40 percent of Indian households, 61 million will come from middle India or middle 40 percent income band, and only 36 million will come from the richest 20 percent of the population.
There are indications, too, that investments and interest in payments digitization will not be confined to consumer/retail transactions. PYMNTS’ own tracking of FinTech fund flows in India show that year to date, roughly $296 million has been invested in the sector. Of that, 94 percent has been focused on the B2B sector.
And, eCommerce platform udaan has raised $280 million in funding from a series of investors.
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