Covid: A booster shot for Digital Payments

Industry Analysis:

Digital payment services in India are riding on high tide for quite a while. Demonetization in 2016 acted as that first dose of vaccine that people were much hesitant to take and the government had to convince the public how good it is for the economy’s health. On the other hand, Covid acted as much needed booster dose where people were voluntarily flooding to the vaccination centers. In these 5 years, i.e. 2016 to 2021, digital transactions volume jumped five-fold from 5 billion to 25 billion(2500 crores). This is 66% higher than China’s 15 billion transactions in 2021. The impact of Covid on digital payments can be assessed from the fact that the number of transactions more than doubled in the last year.

How 1+1+1 became 91%:

Walmart’s PhonePe has emerged as the strongest player in the fintech space reaching 100 crore transactions in the month of Feb itself. The second position belonged to Google Pay which processed around 80 crore transactions. Paytm came as a distant third with 34 crore transactions in the month of February. The combined share of the top 3 players is more than 90% which showcases their dominance in this sector. The average ticket size in FY 2021 was Rs. 1900 compared to Rs. 1200 in FY 2020. The numbers have risen especially in the light of the imposition of localized lockdowns in various parts of the countries. As a result, the numbers are expected to show a minor dip in the short run as and when covid cases fall.