How india payment services market is positioned?
India payment services market which has traditionally been dominated by cash witnessed advancement towards digital transactions both in terms of value and volume during demonetization phase in India. The total number of ATMs (including onsite and offsite) was witnessed to increase from ~ as of 31st March 2013 to ~ as of 31st March 2018, thus displaying a five year CAGR of ~% during the review period. Regulatory authorities such as the Reserve Bank of India (RBI) and the National Payments Corporation of India (NPCI) play a major role in establishing guidelines for effective working within India’s payments landscape.
In India, merchant payments were observed to be the central aspect of all payment services for large enterprises as well as MSMEs, which are increasingly becoming integrated with PoS and mPoS terminal devices. Surge in growth of electronic payments in India, along with rising E-commerce and M-commerce transactions are further expected to give a boost to numerous entities including payment gateway service providers and payment aggregators that facilitate online payments in the country. Besides all these advancements, cash still dominates the entire payment landscape in India and is further expected to hold a majority share in future.
India Payment Services Market Segmentation
By Desktop and Mobile Payments
Desktop payments were witnessed to dominate India payment services market with a volume share of ~% in FY’2018. Increasing adoption of digital transactions post demonetization coupled with affordable desktops and laptops for business purpose has thrived the segments growth. On the other hand, mobile payments were observed to capture the remaining volume share of ~% in India payment services market in FY’2018.
By Type of Industry
Digital transactions towards financial services such as inter or intra transfer of funds, person-to-person funds, and merchant payments for small transaction value dominated India payments market with a volume share of ~% in FY’2018. The ease of conducting financial transactions through digital means is one of the major driving forces behind the segment’s growth. The segment followed with a collective volume share of ~% in India payment services market in FY’2018. Other services such as housing rent, education, purchases of luxuries such as jewelries, cars and rest captured the remaining volume share of ~% in FY’2018.
How m-wallet market of india is positioned?
A mobile wallet is digitally equivalent of physical wallet, where a consumer can store money, make payments or transfer money to other wallet accounts under the same company. M-wallet transactions in India were observed to grow at a massive five year CAGR of ~% over the review period FY’2013-FY’2018. Compared to other payment modes in India, M-wallet service providers have emerged as the most significant contributor in promoting electronic payments in the country owing to the increasing usage of internet and smartphone users in the country.
Some of the major companies having semi-closed wallets include Paytm, Mobikwik, Oxigen wallet and others whereas, closed wallet type companies include SBI E-Buddy, HDFC PayZapp and telecom operators such as Airtel Money, Jio Money, Vodafone M-Pesa and others. Over the forecast period, mobile-wallet transactions are further expected to increase to ~ million by the fiscal year end-ing 2023E and on the other hand, India m-wallet transaction size is further anticipated to increase to INR ~ billion in terms of transaction value by the fiscal year ending 2023E; thus displaying a five year CAGR of ~% and ~% respectively.
What Is The Role Of Payment Gateweay Market In India
Payment gateways play a significant role in E-commerce transactions by authorizing the payment between a merchant and a consumer. Some of the leading payment gateway companies in India include PayPal, Billdesk and others. Demanding factors from Indian millennials such as faster check out and better convenience has been driving the growth of digital payments in India. As a result, it has increased the role of payment gateway providers in the digital payments landscape. Increasing cyber-crimes or threats have forced companies to build platforms with advance security features for early fraud detection and minimizing the collateral damage. The payment gateway market in India was evaluated at INR ~ million in terms of transaction value in the FY’2018.
Large enterprises were witnessed to dominate the Indian payment gateway market with a revenue share of ~% in terms of transaction volume in FY’2018. These enterprises have a higher penetration in the digital payment ecosystem in comparison with the small and medium scale enterprises, thus leaving them with a limited volume share of ~% in the FY’2018.
Due to high influence of open source payment gateway codes coupled with increasing banking platforms has forced the existing payment gateway companies in India to think upon differentiating their services and provide a value-add to their clients. In near future, the payment gateway market is expected to generate a transaction value of INR ~ million by the FY’2023E. Digital channels are the pathway through which a bank can interact with its customers, therefore developing digital channels as customer engagement will play a critical role.
How pos terminal market is positioned in india?
The growth of electronic payments in India is highly dependent upon the card acceptance infrastructure consisting of ATMs and PoS terminals. The Indian customers showcased a positive attitude towards using debit and credit cards, which is evident from a ~% and ~% growth respective at PoS terminals in terms of number of transactions. Several initiatives such as Micro ATMs, Aadhaar-enabled Payment Systems (AePS) and Prime Minister Jan Dhan Yojana (PMJDY) have been driving the demand for PoS terminals in Tier 2 and Tier 3 cities, especially the rural areas. State Bank of India (SBI) witnessed five times growth in the total number of PoS device installations at merchant outlets owing to rising number of digital and plastic card transactions in the country.
PoS terminals market in India had witnessed high growth during the demonetization period. The after effect of which was that there was an increase in deployment of PoS terminals across all sectors such as restaurants, retail, hospitals, warehouses, supermarket.
As India is making efforts towards pushing plastic cash over physical cash; the sale of PoS terminal devices is projected to increase on account of rising penetration of debit and credit cards. India PoS terminal market is anticipated to generate a transaction volume of ~ PoS terminals by the financial year ending 2023E.
How m-pos market is positioned in india?
Acceptance of mPoS in the initial stage was dependent up on the price offering as several merchants who wanted to offer their customers another choice of payment method did not want to invest in costly traditional PoS terminals and therefore preferred to acquire mPoS devices. In terms of number of device installations, India mPoS market was evaluated at ~ thousand in as of 31st March 2013. India’s techno savvy population and a favorable demographic dividend were the two major factors which induced positive growth of mPoS in tier 1 and tier 2 cities in India. A growing number of MSME’s and even some large merchants started to took a note of mPoS, with early adopters preferring a tablet-based mPoS implementation as a complement to traditional PoS or, in some cases, as a replacement for cash registers. India mPoS market increased to ~ thousand device installations as of 31st March 2018, thus growing at a five year CAGR of ~% over the review period FY’2013-FY’2018.
The total number of inactive terminals is observed to be higher in Tier-3 cities with micro merchants having the largest share in inactive terminals. On the other hand, active terminals are dominated by large enterprises and SMEs, who are present in Tier-1 and Tier-2 cities in India.
Future Outlook And Projections In India Payment Services Market
The rapid penetration of smartphones along with widespread of internet connectivity on mobiles devices has created a positive impact on the country’s payment services market. Digital payment services provided by non-banking institutions and the rise of the fintech sector, consumer expectations of one-touch payments, and progress in regulatory governance and tax breaks, will altogether shape up the India’s payments landscape in favor of digital solutions. India payment services market is expected to generate a transaction volume of ~ million and a transaction value of INR ~ trillion by the FY’2023E. Owing to a new generation of digital payment services, opening up new opportunities for a relatively high proportion of “unbanked” to make purchases online, the volume of transaction happening through in digital landscape would change drastically. The growth of e-commerce in India coupled with the country’s immense potential provides lucrative opportunities for retailers and merchants who can support India’s digital payment methods.
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Ankur Gupta, Head Marketing and communications