Ecommerce, gaming, utilities, government services, and financial services reportedly dominated online transactions in the second half of 2023, accounting for nearly 80% of the total volume. The findings are of a recent report by French payment firm Worldline on India's evolving digital payment landscape. The report, titled "India
Digital Payments
Report H22023," reveals a significant shift towards
mobile wallets
and UPI (Unified Payments Interface) transactions.
Ecommerce Leads Online Transactions
In contrast, in-store transactions were driven by everyday purchases at grocery stores, restaurants, service stations, clothing stores, pharmacies, and hospitals, contributing roughly 65% of the transaction volume and nearly 50% of the total value.
UPI Reigns Supreme
UPI continues to be the king of digital payments in India. The report highlights a remarkable 56% year-on-year growth in UPI transactions between July and December 2023. The total volume surged to a staggering 65.7 billion transactions, compared to 42.1 billion in the same period last year. The value of these transactions also witnessed a significant rise of 44%, reaching Rs 99.68 lakh crore.
Growth in Payment Acceptance Channels
The report further emphasizes the rapid increase in payment acceptance channels across India. The number of point-of-sale (PoS) terminals witnessed a substantial 26% growth, reaching 8.5 million by December 2023. Interestingly, private sector banks hold the major share (73%) in this space, followed by public sector banks (18%). UPI QR transactions also displayed a significant jump of 57% during this period.
Credit Cards See Uptick, Debit Cards Stagnant
While UPI dominates digital payments, the report acknowledges a modest growth in the total number of cards in circulation, reaching 1.3 billion. Credit cards saw the most significant increase (21% year-on-year) compared to prepaid cards (13%) and debit cards (2%). However, the overall volume of card transactions witnessed a decline of 7%. Interestingly, card transactions on PoS terminals showed an 8% rise in the second half of 2023.
Electronic Toll Collection on the Rise
The report also highlights the growing adoption of electronic toll collection. The number of tags issued grew by a substantial 45%, indicating a shift towards a more seamless highway experience.
Mobile Payments Here to Stay
This report by Worldline underscores the increasing popularity of mobile payments in India. The significant growth in UPI transactions and the widespread adoption of digital payment channels point towards a future where mobile wallets are the preferred mode of payment for both online and in-store purchases.
FAQs
Ecommerce, gaming, utilities, and government services dominated India's online transactions in H2 2023. UPI transactions surged, mobile wallets gained popularity, and in-store purchases increased.
What are the factors driving the growth of digital payments in India? ›
Several enabling factors like digital India campaign, internet adoption, mobile phone use, opening of bank accounts, FinTech innovation, digital literacy, UPI (Unified Payments Interface) adoption, etc. have all contributed to the rapid growth of digital payments in the country.
What is the growth of online transactions in India? ›
In 2021, the YoY growth was 72% with over 1.49 billion transactions worth INR 5.6 trillion processed in June 2021[5]. At the end of the calendar year 2022, UPI's total transaction value stood at INR 125.95 trillion, up 1.75 X year-on-year (YoY), as per the NPCI.
What is the market size of digital payments in India? ›
According to a reports, the Indian digital payments market was valued at $70.47 billion in 2022 and is expected to reach $201.95 billion by 2028, exhibiting a CAGR of 19.2% during the forecast period.
What is the impact of digital payment system in India? ›
As a result, retail digital payments have witnessed a remarkable surge and grown at 50.84%15 in transaction volume from 2017 to 2023. India clocked ~368.82 million16 daily digital transactions in FY 2022–2023.
What is the main driver of electronic payment growth? ›
The main driver of electronic payment growth is technological development. Advances in technology have revolutionized the way we conduct financial transactions, making them faster, more secure, and more convenient.
Why did digital payment start in India? ›
The Indian government has played a role in promoting payments through initiatives like demonetisation. This initiative aimed to reduce cash-based transactions while encouraging the adoption of electronic payment methods. The introduction of UPI by the NPCI has transformed how people conduct transactions.
What is the future prospect of digital payments in India? ›
Growth of UPI
With support from major banks and payment apps, UPI will facilitate over half of all digital payments in India by 2024. New use cases around international remittances and merchant payments will further boost UPI adoption.
Which country has the highest digital payments? ›
Which country is using the maximum transaction digitally? India has retained the top spot in the world with 25.5 billion real-time payment transactions, followed by China with 15.7 billion transactions.
What is the key factor for the growth of e-commerce in India? ›
Increasing Internet and Smartphone Penetration
This broader access is directly contributing to the growth of e-commerce, as more people can shop online.
UPI is India's popular mobile-based real-time payment system, which enables instant personal and merchant payments. It processes over seventy-five percent of the country's retail digital payments, registering over 14 billion transactions in May 2024 alone.
What is the digital growth rate of India? ›
India's digital economy is growing at 2.8% per annum and is expected to reach $1 trillion by 2027-28, Minister of State for Electronics and IT Rajeev Chandrasekhar said at an outreach programme.
What is the limit of digital payment in India? ›
The Reserve Bank of India (RBI) has provided major relief to UPI consumers. The central bank has increased the limit for making payments through UPI from Rs 1 lakh to Rs 5 lakh.
Who controls digital payments in India? ›
National Payments Corporation of India (NPCI), an umbrella organisation for operating retail payments and settlement systems in India, is an initiative of Reserve Bank of India (RBI) and Indian Banks' Association (IBA) under the provisions of the Payment and Settlement Systems Act, 2007, for creating a robust Payment & ...
What is the status of digital payments in India? ›
The Minister further stated that the total digital payment transactions volume increased from 2,071 crore in FY 2017-18 to 13,462 crore in FY 2022-23 at a CAGR of 45 per cent. During current FY 2023-24, digital payments transactions have reached 11,660 crore till 11.12. 2023.
How many digital payments per day in India? ›
UPI's share in digital payments reached nearly 80% in 2023 and is the biggest contributor to the growth of digital payments in India. Retail digital payments in India grew significantly, and UPI transactions are expected to cross 100 crore per day.
What are the factors influencing online payment system? ›
The customers' perception of EPS is mostly influenced by factors such as flexibility of the payment system, functionality, data management, privacy, and security of the system (Harris et al. 2011). Customers of EPS fear higher risk in using the web for financial transactions (Aladwani 2001).
What are the major factors for the growth of e-commerce in India? ›
The e-commerce boom in India is fueled by several factors, including a significant increase in internet and smartphone penetration, the digitalisation of payment methods, a young and tech-savvy population, government initiatives promoting the digital economy, and improvements in logistics and supply chain ...
What are the factors affecting the digital divide in India? ›
The paper reveals that obstacles such as illiteracy, lack of skills, infrastructures, and investment in rural areas must be tackled if India is to diminish the gap of digital divide.
What are the factors driving digital banking? ›
Increasing usage of smart devices, improved connectivity, and demand for high-end user experience are among the key aspects driving the digital transformation trend, which brings services to the customer's doorstep. The digital revolution is reshaping the banking industry, paving the way for innovation and growth.
