The number of transactions being done via mobile phone, thanks to the rise of UPI and QR codes, are rising significantly in India, but China is still the leader when it comes to payments made at physical merchants by mobile, European payments and transactional services major Worldline has said its latest ‘India Digital Payments’ report.
The report said India is poised to be one the largest and fastest-growing digital payments markets in the world with 1.18 billion wireless telecom subscriptions.
The report also argued that a significant number of transactions are being done through mobile phones in India, thanks to the advent of UPI and the rollout of millions of QRs at physical merchant locations.
Mobile payments on the rise
E-commerce transactions that are being completed through UPI also have a mobile component to it, it said. “In April 2020, the number of transactions done through mobile apps was 1.12 billion; in June 2021 that number was 3.7 billion,” said the report.
Notably, China leads the way with 81 per cent of smartphone users having made payments at physical merchants via mobile, in the previous six months. Denmark comes a distant second with 41 per cent. India is at 6th with 20.2 per cent and the US is at 17.7 per cent.
India has also seen an uptick in the POS terminal count throughout the year. It was 4.71 million in January 2021 and 4.97 million in September 2021.
“This kind of growth can be attributed to the operationalisation of Payments Infrastructure Development Fund (PIDF) Scheme by the RBI. The fund aims to create 3 million merchant touchpoints every year from January 1, 2021, for three years,” the report adds.
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Private sector banks rule POS market
Overall, the private sector banks represent about 67 per cent of the POS terminal market, while public sector banks account for 26 per cent. Payments banks accounted for 6 per cent market share, and foreign banks continue to represent 1 per cent share.
Among the banks, HDFC Bank holds the top position with 19 per cent market share, followed by UCO Bank and Axis Bank, with 15 per cent market share each.
At physical merchant touchpoints, groceries, restaurants, clothing and apparel, pharmacy and medical, hotels, jewellery retail, and other retail stores accounted for over 40 per cent in terms of volume and about 50 per cent in terms of value in Q3 2021.
In the online space, e-commerce, gaming, utility and financial services contributed to over 85 per cent of transactions in terms of volume and 41 per cent in value in Q3 2021.
Maharashtra, Tamil Nadu, Karnataka topped the states with the highest transactions at physical touchpoints, while Hyderabad, Bengaluru, Chennai topped in terms of cities.
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Card transactions up
As per the Worldline report, as of September 30, the number of cards in circulation stood at 985.35 million, including 920.30 million debit and 65.02 million credit cards, recording YoY growth of 8.65 per cent and 10.78 per cent, respectively.
In Q3 alone, over 14.27 million debit cards and about 2.21 million credit cards were added to the system. Credit still forms a small part of the system (7 per cent), with debit cards dominating with 93 per cent market share.
The number of credit card transactions processed at POS terminals was 284.64 million, while e-commerce transactions were 272.59 million.
As for prepaid payment instruments, there were 2.24 billion PPIs, of which 225.87 million comprised of prepaid cards and over 2.02 billion comprised of mobile wallets.
The number of transactions through mobile wallets in Q3 2021 was 1.21 billion and its value was Rs 604.43 billion.
In Q3 2021, consumers made 12.33 billion mobile-based payments whereas net banking or internet browser-based transactions were over 937.60 million.
UPI bridges gap between P2P and P2M
In the UPI space, out of the total volumes, 54 per cent of transactions were P2P (Person-to-Person) while 46 per cent were P2M (Person-to Merchant). “This demonstrates UPI has managed to bridge the gap between P2P and P2M transactions,” the report highlights.
In October, UPI volume and value achieved all-time high transactions of 4 billion and Rs 7.71 lakh crore, respectively. In Q3 2021, UPI saw a 103 per cent increase in volume and a close to a 100 per cent increase in value as compared with Q3 2020.
A total of 30 banks joined the UPI ecosystem in Q3 2021, bringing the total number of banks providing UPI services to 259 as of September 2021.
NETC, BBPCU, AePS modes
In Q3 2021, NETC processed about 587.14 million transactions worth Rs 9,062 crore. The transactions volume passing through Bharat Bill Payment Central Unit (BBPCU) in Q3 2021 stood at 169.56 million, while the value of the transactions was Rs 31,947 crore.
Aadhaar-enabled payments service or AePS transactions (Offus, BHIM Aadhaar Pay) in Q3 2021 recorded 21 per cent growth over Q3 2020.
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