Digital payments show steady signs of recovery
In the face of this crisis, businesses are the worst hit; owing to the decline of their operations, lack of investments and uncertainty. The resulting economic disruption paired with new norms of social distancing have accelerated our inclination to digital. And this has given much impetus to the digital payments sector in India. The sector's slow but steady stability and potential for innovation is helping it start over with the new normal.
The payment ecosystem has been shifting to a digital model in the recent past and now amid the nation-wide crisis, the implementation has further been augmented across the country. While temporary shutting down of shops, reduced expenditure by consumers, cross-border payments are said to create adverse effects on digital payments, few areas as online grocery stores, online pharmacies, OTT players (telecom and media), recharges and utility/bill payments are fueling its growth amid the pandemic.
The Government too has extended its helping hand towards digital payment providers by ensuring monetary assistance to the deprived via direct transfers to bank accounts. To ensure contactless payments, the Government has further requested people to switch to digital payments. In the recent months, almost 60 per cent of digital payment transactions are done by using UPI and mobile wallets. Looks like these digital wallets have started bouncing back. Almost for every other purchase or payment, consumers have started using digital money wallets to avoid any kind of contact threat.
As per a recent report, UPI, operated by the National Payments Corp of India (NPCI), has processed 1.23 billion transactions worth Rs 2.41 lakh crore until June 28, the most value recorded by the channel in a month, Reserve Bank of India (RBI) data showed. The monthly volume in April was 990 million amounting to Rs.1.5 lakh crore, recording the sharpest month-on-month fall on the platform since it became operational in 2016. Experts are of the belief that the UPI increase is due to consumers increasingly paying utility and shopping bills through contactless modes. (source: Economic Times)
Not only this, Google Pay in the recent months (at the time of covid- 19 unlock phases) has witnessed an upsurge in the number of bill payments and online recharges followed by PhonePe which has seen increase in payment volumes as it was before lockdown. The surge is primarily because of the re-opening of online and offline stores across different parts of the country. Volume of card payments too is recuperating by almost 70-80 per cent from the percentage it had during strict lockdown. While mostly credit card payments have boomeranged, debit card payments are not far behind. In fact, transactions by debit card have increased comparatively from March and April.
The spring back in the digital payment transactions can be attributed to the re-commencing of e-commerce operations for transporting essential and eventually non-essential things, together with a gush in payments to OTT and education platform. Consumers are gradually working on their retail spends resulting in the rise of digital payments.
What lies Ahead
Despite several efforts and preventive measures to combat the covid-19 situation, businesses will take their own time to scale up their operations. It is likely that there will be a gradual renewal in their models, approaches and strategies to their business resilience. While we see positive signs concerning digital payment sector, the ecosystem will survive the crisis, evolve and find out new ways forward but in a measured pace.