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India Digital Payments: 2020 Country Adoption Report

January 7, 2022 4088 1 Digital Transformation

India Digital Payments: 2020 Country Adoption Report

India’s digital revolution in the past two decades has significantly contributed to the adoption of digital payments in the country. For two years in a row now, India has reported the highest number of real-time digital transactions processed across the world. NASSCOM’s digital payments adoption study – India Digital Payments – 2020 Country Adoption Report – presents a first-of-its-kind in the world Digital Payments Adoption Maturity Index, with a comprehensive coverage, in-depth adoption assessment, and segment-wise maturity analysis. Covering 10,000+ individuals from 150+ cities, 225+ merchants, and 230+ enterprises, the index assesses both the adoption scale and the depth of adoption of digital payments after nearly two decades of mainstream use.

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India’s digital payments journey started about two decades ago, as select usage of credit cards by globally mobile individuals gave way to domestic and low-cost electronic funds transfer systems, mass-use credit cards and debit cards, and the more recent and blockbuster UPI phenomenon. UPI led to a plethora of digital payments options linked to Aadhaar, digital wallets, Bharat Bill Payments Systems, etc.

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Concurrently, availability of smartphones and mobile banking, and access to Internet and low-cost mobile data plans, have both accelerated the pace of adoption and deepened the maturity of digital users in their exposure to the various digital payments systems in India.

When NASSCOM conducted the pan-India survey of 10,000+ individuals and 500+ businesses of all sizes, a first-of-its-kind across India, and the world, we found revealing insights. The study covers a comprehensive analysis of the actual use of digital payments across various demographic segments by age, income, education, as well as, by spending behaviors, comfort with digital tech, and the extent of use of the diverse digital payments solutions. The study analyses micro-segments of high maturity and very low maturity to further provide insights into what differentiates usage across these micro-segments.

While overall digital payments adoption in India is at a promising high of 77% (77 people out of 100 use digital payments), the actual maturity of use is at a low 4.1 on a maturity scale of 10 (variety of use cases of digital payments adopted).

 

Highlights from the research reveal:

Digital payments in India are accelerating faster than ever

  • Digital payments in India have leapt 160X in the past two decades. It has grown 10X in volume in past 5 years, to over 800% of India’s GDP today. India now ranks no.1 in the world in terms of real-time digital payments transactions.
  • The COVID-19 pandemic has further accelerated adoption of digital payments, which has grown 27% YoY, with UPI itself now accounting for 51% of volumes

Overall adoption trends indicate an uptrend across all segments of users

  • Over 77% of Indians use digital payments regularly
  • 45% of adopters were moderate to high users consistently using 6-8 digital payment modes
  • 90%+ adoption seen in large enterprises and merchants with both B2B and B2C businesses
  • Payments between the government and individuals/businesses (P2G, B2G) are amongst the top three spend areas

Micro-segments of high and low maturity highlight areas of focused intervention

  • High maturity users include Tier-1 residents, those in 45-60 age group with annual income >INR 10 lakh – these segments spent 5X more using digital modes than the average consumer
  • Interestingly, 45% of mature merchant users came from Tier 2 cities, while 95% of large companies and young enterprises (2-5 yrs old) were mature users
  • Segments that can benefit immensely from targeted solutions include the low maturity segments of Tier 4 and beyond consumers, old users (>60 yrs), and SMEs in B2B or B2C-only businesses

The ecosystem indicates the need for innovative, affordable, and secure solutions

  • Enhanced connectivity, digital literacy, and reliable security solutions are necessary to transform the speed and maturity of adoption, particularly across Tier 3-6 regions, 55+ users, and B2B value-chains.
  • Technology and policy convergence can prove turnkey – as fintechs innovate on low-cost, mass-customized solutions – and policy flexibility ensures competitiveness, tech innovation, and streamlined processes.  

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