India’s mobile payments surpassed credit cards and are clocking more than $1 trillion in annualized value in 2021.
2021 India Mobile Payments Market Report says that mobile payments in India accelerated their lead over cards amid the COVID-19 pandemic. Large technology companies intermediating mobile payments are becoming financial supermarkets by cultivating partnerships with financial institutions and securing regulatory licenses.
Key highlights from the report include:
- Payments made via apps that bypass credit card rails rose 67% to $478 billion in 2020 and are clocking more than $1 trillion in annualized value in 2021.
- By comparison, credit card transaction value in the industry shrunk 14% in fiscal 2021 after years of high double-digit growth rates. For banks, the ongoing pandemic shaved off $524 million in credit card interchange revenue, per our estimates, as consumers hunkered down amid lockdown measures.
- As card payments tend to be more strongly correlated with economic activity, an improvement in consumption expenditure could restore growth in card activity. But we expect mobile payments to continue to grow faster than cards due to growing consumer preference to use smartphones to pay.
- Demand for cash is slowing in the wake of rising mobile payment adoption. For each ATM withdrawal, Indians made 3.7 transactions using mobile phones in 2020.
- There’s plenty of room for rapid growth rates in digital payments in India in the next few years. Based on a review of instant payments in four large Asia-Pacific economies, India processed the highest number of real-time transactions in 2020. But the country’s real-time transactions per capita of 16 in 2020 were the lowest in the group, which includes Australia, Thailand and Singapore.
- PhonePe and Google Pay continue to dominate mobile payments. But we think India’s mobile payments market will not become a duopoly like in mainland China, where Alipay and WeChat process the bulk of mobile payments.
- Payment fintechs with business-to-business models burn significantly less cash than their consumer-facing brethren. Large fintechs that closely work with large and small enterprises are poised for overseas expansion and business diversification.