As a result of the change in consumer behavior brought on by the pandemic and the digitization of Kirana stores, new payment frameworks have emerged in the country in response to the growing demand for digital payment solutions.
In recent years, techceleration has changed the financial landscape. The use of paper-based payment methods, such as checks and sight drafts, has fallen dramatically in volume and value, while the popularity of digital payments has increased in both cases.
Then came the pandemic, accelerating this transition to the field of consumption. This global crisis alone has dramatically changed the way consumers manage their finances. With the return to normal, resulting in increased consumer demand, it is evident that this new financial landscape is here to stay. As economies get back on track, going digital is not only an easy fix for consumers and retailers, but it’s a critical part of the path to economic recovery.
Over the past year, the retail digital payments market has reached new heights as more people have stopped using cash for fear of contracting Covid-19 and turned to transaction mode digital for convenience. Data from the Reserve Bank of India showed that digital transactions in the total volume of non-cash retail payments during the period 2020-21 jumped to 98.5%, with transfers being the most common method. used. Data for the previous year was 97.0 percent.
While the majority of people opted for credit card payments, others preferred modes such as national electronic funds transfer (NEFT), unified payment interface (UPI), immediate payment service (IMPS), BHIM Aadhaar Pay and others, according to RBI data. In addition to the government-supported modes of transaction, private businesses also flourished during this period. Existing companies like Paytm, Payworld, Google Pay, PhonePe and others have grown in popularity a lot during the pandemic period. Industry experts predict that these companies will further strengthen their market position through their ease of access in the near future. According to a research report titled “India Payments Market Report 2021-2027: The digitization of payments has gained significant momentum” and the Indian payments market is expected to reach 280.84 trillion rupees by 2027.
Under normal conditions, it would take a long time to reach the target numbers. But with the current circumstances and the availability of assisted retail stores as a support in remote areas, it is possible that the Indian market will hit the nail on the head due to the ongoing trends in the digital payment landscape. Some of the retail trends are as follows:
- Online shopping: The lockdowns caused by the pandemic have emerged as a blessing in disguise for India’s e-commerce sector as it grew 36% over the year in the last quarter of 2020, the personal care, beauty and beauty segments and of well-being being the main beneficiaries. Powered by the growing penetration of smartphones, supported by the 4G connection and ease of purchase, the industry is expected to reach US $ 200 billion by 2026 compared to US $ 38.5 billion in 2017.
- Tap-and-Go Payments: This type of payment system is booming because it allows people to avoid contact with other machines besides their credit or debit cards. Even in the post-covid era, with people living in an unknown fear of the contraction, PayWorld expects contactless payments to continue to rise. On top of that, the RBI has increased the limits for contactless payments from Rs 2,000 to Rs 5,000, a move to further promote digital transactions.
- Digital wallets: Supported by the digitization of Kirana stores across the country and the growing demand for contactless payments, digital wallets have made inroads into the offline retail segment. Digital wallets have become one of the most popular contactless payment methods. Initiatives by digital holding companies to tap into the kirana segment have contributed to this trend.
- Payment by QR code: Payments made via QR code (matrix created in 1994 for the Japanese auto industry) are prevalent in an emerging market like India primarily because they are easy to use. This payment method can be processed in a number of ways, including app-to-app payments, smartphone scanning of the company’s QR code, and more.
- Portable payment devices: With technology developing at a rapid pace, the time has come for wearable smart devices, such as smartwatches, which not only keep track of the health and overall metabolism of users, but also allow them to conduct transactions. with the tap-and-go method. Transactions made by these smart devices are considered secure.
According to the existing technologies, all of these payment trends are considered to be safe and hassle-free. People embrace these trends with open arms. For the foreseeable future, we will see the full potential of these trends and how they develop. Meanwhile, businesses and banks, along with the RBI and the central government, are making joint efforts to keep the platform secure and free from cyber attacks.
– This article is written by Praveen Dhabhai, COO, Payworld.