Security is not seen as a major issue in India. Digital wallets are the most cherished digital payment instruments.
India will have digital payments worth USD 500 billion by 2020, as per Digital Payments 2020 report by the Boston Consulting Group and Google. As many as 22% of all payments were cashless in India in 2015, out of which digital payments were 13%. The non-cash payments as per the report are forecasted to reach 39% in 2020 out of which 26% will be digital and non-cash will reach as high as 59% out of which 37% will be digital payments in India by 2025.
Most of the digital payments are growing by virtue of smart-phones and mobile phones penetrating internet into the heart of India. Internet users in India were 300 million in 2015 which is predicted to go beyond double and reach 650 by 2020, giving another boost to digital payments.
Digital is preferred the most over the non-cash payment modes by Indians.
Number of people going digital will jump from 1,250 million people in 2015 to 1,350 million in 2020 in India, according to the Google-BCG report.
There is a 50% of year over year growth in digital transactions and branch based transaction have seen a decline of 7% in financial year 2015 as compared to financial year 2014.
Fruther, 3 out of 4 merchants in India believe that digital will grow bigger. Around 75% merchants believe that adopting digital payment methods will help grow their business.
The report predicts somewhat similar for merchants too. As much as 10 times more growth is foreseen for merchants by 2020. The growth will be perpetual and as per the report, cash to non-cash ratio will invert in the next 10 years.
Wallets are most favored
Out of all the digital payment modes, Wallets are most preferred in India. As many as 81% users of digital use it over any other non-cash method. Users are already using Wallets 3 times the number of credit cards issues in the country. Number of unique active wallet users (80-85 million) has already surpassed that of the online banking users (60 million), as per the report.
Metro versus Non-Metro
Metro are deriving the digital payments in India. With growth in mobile phones and internet reaching rural India, the power is expected to be shifted. Recharge of prepaid mobile recharge and bill payments remain the most popular use-cases in both metro and non-metro cities.
Security is NOT a challenge
Security, identity theft and fraud are not big barriers in India, as per the report. This is in contrast to the common belief. Instead, habit of using cash was posing the most hindrance to the adoption of digital payments.