Worldline India, a payment and transaction processing company believes that the Indian e-commerce market could grow by four times and touch a size of $150 billion by 2022.
Worldline tracked the trends around payments, especially in China and India, to back its claim.
The company released a twenty three page report detailing the major trends in digital payments in China and India. On the digital payments landscape in India, Worldline cited the latest available data on PoS terminals, total transaction volume, number of people/POS terminal, also total POS terminals by merchant acquiring banks.
The growth in digital payments, alongside growth in income and a surge in internet users, prompted Worldline to say that e-commerce would soar to $150 billion in potential.
The company has one million merchant touchpoints and analysed approximately a billion odd transactions to provide some unique insights.
The company said, The merchant categories with the highest volume and value of transactions in 2018 were Grocery Stores and Supermarkets, Restaurants, Service Stations, Clothing Stores and Hotels which accounted for about 45% of transactions. The categories remained the same for both credit and debit card transactions.
Worldline also added that the month of December saw the highest number of transactions while November 4 ranked as the day with the highest number of transactions but this should come as no surprise, given it was the day Diwali shopping.
"The day with second highest number of transactions was June 16 but then again it should come as no surprise since it was the day of Eid-ul-Fitr. Therefore, we can safely say when there's a festival in India, expect a much higher than average number of transactions," added Worldline in its note.
Here are some interesting take-aways from the Worldline Study:
- The transactions at POS terminals increased from 4.6 billion transactions in 2017 to 5.8 billion transactions in 2018 (up by 26%), the share of card transactions at POS terminals to total card transactions remained constant at 35% to 38% only.
- The value of transactions at POS terminals have increased from INR 8.8 trillion in 2017 to INR 11.3 trillion in 2018 (up by 27%), the share of value of money spent through cards at POS transactions to total money spent through card transactions at POS terminals and ATMs went up from 25% to 26% only.
- The number of POS terminals increased by 17% while the number of ATMs reduced during the year indicating that despite advances being made in digital payments; cash is still king.
- 29% of all transactions done on POS terminals were done through credit cards and they translated to 50% of the total amount spent on POS terminals.
- The number of ATMs decreased from 0.22 million in 2017 to 0.2 million in December 2018. However, cash withdrawals have bucked the trend of reducing ATMs; in 2018, cash withdrawals stood at INR 32.69 trillion, a rise of 21.2% over 2017.
- In 2018, the total number of credit card transactions was 1.68 billion transactions, an increase of 24% over the previous year and the total number of debit card transactions was 13.62 trillion transactions, an increase of 16.1% over the previous year.
- The number of transactions done on mobile wallets in 2018 was 3.98 billion, an increase of 33.4% over 2017 while the value of transactions in 2018 was INR 1.73 trillion, an increase of 81.46% over the previous year.
Deepak Chandnani, MD for Worldline South Asia & Middle East said, "It is heartening to see that Indian consumers are switching to non-cash methods for making payments and we at Worldline have a front-row seat to these fast paced changes."
"While innovative payments services providing convenient payment products have been successful in transforming the way we make payments today, the biggest change undeniably is that it is now 'normal' for people to make digital payments and for small merchants to accept them – this is what is making the digital payments revolution in India sustainable," he added.
Digital Payments Landscape in China?
Worldline's introduction in the report is a fact-check of China's digital payments landscape. The payments processing company said that a news story had wrongly claimed that beggars in China were accepting alms via QR codes in 2018. "There is probably some hyperbole in that story, but it indicates how ubiquitous digital payments have become in China. In 2017, the ratio of non-cash transactions to GDP stood at 45 compared to 20 for India," said the report.
Worldline cited data that estimates 49% of e-commerce transactions done via wallets. Alipay and WeChat Pay lead the wallet usage with reportedly accounting for 92% of mobile payments. Payments through cards by comparison accounted for only 23%. In its report, Sunil Rongala, VP Strategy, Products and Analytics says that the Chinese digital payments may have exploded owing to its focus on customer experience although it also had a solid back-end. "The ability to pay through omnichannels seamlessly blended with social media, e-commerce shopping and other functions such as finance has led to mobile payments becoming such a force to reckon with," wrote Rongala for the report.
The study cites numbers released by the People's Bank of China. In China, the number of mobile payments stood at 25.71 billion transaction in 2016.
This rose to 37.55 billion in 2017 and 42.81 billion for the first 3 quarters on 2018.
In terms of value, mobile payments accounted for RMB 157.55 trillion (USD 23.45 trillion) in 2016, RMB 202.93 trillion (USD 30.18 trillion) in 2017 and RMB 199.18 trillion (USD 29.63 trillion) for the first 3 quarters of 2018; 2018 transactions will likely be about RMB 275 trillion (USD 40.9 trillion).
Worldline also cited a Frost & Sullivan estimate that pegged mobile payments in China to hit a staggering $96.73 trillion in 2023.
For reference, UPI transactions amounted to $83.35 billion in 2018.