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24/10/2024
In the fast-evolving realm of digital finance, India is continuing to lead the charge. The Worldline India Digital Payments Report for 1H 2024 was released earlier this month. It gives a comprehensive view on India's digital payment scene and identifies such trends rise at present that will change money usage patterns in India and which pocket they end up in. This article will delve into the key insights from the report and explore what it might means for India's future digital payments.
In India's digital payment warfare, the Unified Payments Interface continues to be the absolute leader. In 1H 2024, there was a sensational 78.97 billion transactions using UPI, up 52% from the same period in 2023. This explosion in volume of transactions was complemented by a 40 percent increase transaction value, at a hefty INR 116.63 trillion.
The trend towards UPI is evident in the increasing number of micro-transactions being made with it. In 1H 2023, the average ticket size for UPI transactions had dropped from INR 1,603 to INR 1,478 in 1H 2024, illustrating that more Indians are using the platform for smaller, everyday purchases. This means that UPI today can be used as much as any form of transaction and has a long future ahead.
One of the most important trends identified in the report is a breakneck expansion of the P2M segment. P2M transaction volume surged by 68% compared to 1H 2023 while the value of P2M transactions shot up a staggering 62%. This growth outpaced that of person-to-person (P2P) transactions, which increased in volume by 32% and value by 33%.
With the P2M transactions, which have been growing to upticks across India, businesses are looking increasingly towards digital payment methods. Customers going anywhere from grocery stores and restaurants to petrol stations and official government offices, merchants are slowly realizing that providing options for electronic payment is the way to go.
India's card payment system is undergoing its own revolution. By June 2024, the total number of cards in circulation had reached 1.451 billion, of which credit cards grew most robustly of all by 26% year-on-year. Interestingly, there's a clear division between private and public sector banks in card issuance.
When it comes to credit cards, private banks reign with 71% of all cards issued. In contrast, public sector banks are dominant in debit card issuance at 65%. This division reflects their different strategies and attitude towards risk-potentially more lucrative credit market pursued by private banks vs. broader financial inclusion through debit cards mandated by public sector banks.
Payments are an indispensable part of India's digital financial ecosystem. By 1H 2024 the mobile payments volume had already reached a whopping 76.04 billion, up 46% from 1H 2023. In value terms, the INR 179.41 trillion of transactions was also significantly higher than at the same time last year.
The average value of transactions on mobile dropped by 7%, indicating that Indians are feeling increasingly comfortable using their phones to make everyday purchases. This shows the increasing importance of mobile technology in providing financial services and convenience for everyone across all parts of the country.
The growth of digital payment infrastructure makes an important contribution to the development of digital transaction services. The number of PoS terminals rose by 17 percent from January 2023 to June 2024 to 8.96 million. This figure was also up 39 percent from the previous six months in UPI QRs to 340 million.
This rapid expansion of payment infrastructure, especially UPI QRs, has made it easier than ever for businesses all sizes to accept digital payments. QR codes are now ubiquitous in India, from small street vendors and large retail chains all the way to banks and brands selling online right from their home pages, which means wide access across the board.
In the UPI space, three apps dominate the market: PhonePe, Google Pay, and Paytm. As of June 2024, these three together claimed 94.83% of UPI transaction volume and 92.21% transaction value. Although slightly down from last year their combined market share remains significant because they provide better service than others in different aspects like user experience and trust from well-known brand.
The number of ETC tags issued jumped by 46 percent from January 2023 to June 2024 with 94.56 million now recorded. Of course, there are other factors which come into play here as well - for example rising car sales under government policy support is just one part of it. ETC not only simplifies toll handling and management, but also creates a huge new opportunity to expand cashless transactions.
Looking back over the first half of 2024, this serves as a reminder to harness insights and information for inclusive development. It also signifies that the digital payments revolution which India underwent is not over yet.
The continued growth of UPI, the evolution of card payments, the expansion of mobile transactions and the development of new payment technologies like ETC all point towards a future where digital transactions are the norm rather than exception.
The steady decrease in average ticket sizes across different payment methods suggests that digital payments have deeply penetrated everyday life in India. With this move toward micro-transactions is good news for financial inclusion bringing many more Indians into the formal financial system.
Nevertheless, as the digital payment landscape continues to evolve, it will be vital to address issues such as data breaches and other cybersecurity risks, disparities in access between rural and urban areas, continued innovation designed specifically to meet the changing needs of consumers.
To sum up, the Worldline India Digital Payments Report 1H 2024 paints a picture of a nation rapidly taking full advantage of digital finance. As India follows this path on a national scale, it is destined to emerge as a global leader in digital payments. In the process, India will set entirely new benchmarks for innovation, inclusion and even convenience in the financial world.
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