Story of potential 800 million Indian mobile payment consumers.
1. Indian Digital payments industry currently stands at INR 2,153 Tn (~961% of GDP) and will grow at 27% CAGR to reach INR 7,092 Tn (~2278% of GDP) by FY25. This growth will be driven by:
2. Mobile payments currently stands at INR 25 Tn and is expected to grow at 58% CAGR to reach INR 245 Tn by FY25. This growth will be driven by:
3. P2M Market (merchant payments) currently stands at INR 4 Tn and is expected to grow at 52% CAGR to reach INR 33 Tn by FY25. This growth is driven by:
4. EDC & payment gateway aggregators are expected to grow significantly by FY25:
5. ‘Integrated Financial services’ models are better placed on their path to profitability vis-à-vis standalone models:
6. In India, multiple digital payment players have started taking the integrated route over the last few years.
Going forward, these players will continue to expand their portfolio and at the same time consolidate their position in each of these verticals.
1. Indian Digital payments industry currently stands at INR 2,153 Tn (~961% of GDP) and will grow at 27% CAGR to reach INR 7,092 Tn (~2278% of GDP) by FY25. This growth will be driven by:
- Strong use case of merchant payments across user cohorts.
- Government policies such as Jan Dhan Yojana, personal data protection bill along with growth of MSMEs.
- Low penetration of banking and financialservices in India; growth of millennials & high smartphone penetration, indicating strong headroom for growth.
2. Mobile payments currently stands at INR 25 Tn and is expected to grow at 58% CAGR to reach INR 245 Tn by FY25. This growth will be driven by:
- High consumer satisfaction for mobile payments when compared to other modes.
- Government policies such as Removal of MDR, mandatory UPI QR for businesses (turnover INR 50Cr or above), Video KYC and others, which is a catalyst for merchants, and thereby customers to increase usage.
3. P2M Market (merchant payments) currently stands at INR 4 Tn and is expected to grow at 52% CAGR to reach INR 33 Tn by FY25. This growth is driven by:
- Strong use case of merchant payments across user cohorts.
- High consumer and merchant satisfaction for Mobile payments in P2M.
- Simplified consumer & merchant journey when compared to other modes of payment.
- Paytm is the largest player in the P2M Market with 50% market share followed by Phonepe and Google Pay.
4. EDC & payment gateway aggregators are expected to grow significantly by FY25:
- The EDC market currently stands at ~5 Mn terminals and is expected to grow to ~17 Mn terminals by FY25 driven by Logistics, E-commerce, Foodtech, growth of MSMEs, increased usage by traffic police as well as Government initiatives.
- This significant opportunity has led to the entry of multiple new age digital players such as mSwipe, Pinelabs, Ezetap, Paytm and others.
- A number of Leading players such as Paytm & Billdesk drive ~76% share of this gateway aggregator market in terms of transactions.
5. ‘Integrated Financial services’ models are better placed on their path to profitability vis-à-vis standalone models:
- While ‘Integrated Financial services’ models offer multiple services/ products apart from the core offering of payments, standalone models only offer digital payment as their core offerings and as a result face challenges of revenue realization and profitability.
- Basis of the analysis, the author believes that ‘Integrated Financial services’ will address these challenges of standalone model based on 3 levers:
- Higher consumer satisfaction as consumers find multiple solutions on the same platform.
- Higher merchant satisfaction as ease of doing business improves with multiple services available on the same platform.
- Better monetization as an integrated model enables cross-selling multiple services leading to higher revenue generation and better take rates.
6. In India, multiple digital payment players have started taking the integrated route over the last few years.
- Paytm has taken an integrated route by adding multiple services in its portfolio such as lending, insurtech, wealthtech, payments bank along with EDC terminals, gateway aggregator & e commerce.
- Similarly PhonePe is offering insurtech, wealthtech, e-commerce & ATM services and plans to offer lending in future.
- Google pay is offering wealthtech and plans to enter into lending and insurtech soon.
- At the same time Mobikwik is offering services such as lending, insurtech and wealthtech.
Going forward, these players will continue to expand their portfolio and at the same time consolidate their position in each of these verticals.
Table of Contents
1. Indian Digital Payments Landscape
2. Mobile payments revolutionizing P2M
3. Payment Enablers (EDC, Gateway aggregators)
4. Transformation from Digital payments to Financial services
5. Selected case studies of Digital payments Players
Methodology
1. Primary Research Consumers, stakeholders and industry experts are interviewed to help us validate key trends and market estimations.
While the exact figures may vary for different reports, on average, the publisher conducts:
- ~1,000+ consumer surveys
- ~30+ IDIs (in-depth interviews) with stakeholders (consumers, suppliers, distributors and delivery executives, among others)
- ~25+ detailed discussions with industry experts Depending on the report in question, consumers and stakeholders are distributed across:
- City tiers (Metros, Tier 1, Tier 2, Tier 3 & Tier 4 cities)
- Income levels
- Genders
- Age groups
- Professions
- Internet usage pattern
- Geographies
2. Secondary Research Secondary includes analysis of databases available in public domain. Information sought is cross-referenced and aligned for soundness.
Note: In order to maintain confidentiality, results and analysis of the surveys and expert interviews are presented at level of overall scenario analysis and representation only.
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