Contactless Payment Transactions See Big Growth

It is proven beyond doubt that the ongoing pandemic had an indelible impact on consumer behaviour, notably shifting priorities towards health, wellness and safety. Now with physical distancing being the new normal, people in India are increasingly gravitating towards contactless modes of digital payments owing to convenience, speed, and security. From increasing preference for contactless banking to greater adoption of contactless payment systems in retail, Indian consumers are now shying away from engaging in any transactions which involve paper or plastic money

With Reserve Bank of India (RBI) increasing the per transaction limit of card transaction in contactless mode to Rs. 5,000 starting January 1, 2021, businesses are also proactively adapting newer digital technologies that can bring them to the forefront of changing the business landscape. 

“We expect the volumes of payment transactions to surge from this month onwards. Also, with the increase in the trust in digital payments over the last year or so, the value of transactions will continue to rise. We are aiming to double of UPI annualized transaction value to U$ 20 bn by end of FY22,” reveals Gautam Kaushik, Group President, BharatPe.

Even though there has been no research study on its current market size, TechSci Research claims that the contactless payments market is expected to reach US$ 26.3 billion by 2027, which records 12.9% growth. In the post-COVID era, India, along with some of its global peers have seen tremendous growth in FinTech. According to Boston Consulting Group (BCG) and FICCAI India's FinTech industry is estimated to inch up to US$ 150-160 billion by 2025 from the current value of US$ 50-60 billion. 

“Increasing adoption and usage of mobile payments amongst consumers in India led to UPI being the most preferred mode of transaction during the second wave of the pandemic on our devices. It has surpassed to pre-second wave levels by more than 25%, both in terms of value and volume, reveals a Pine Labs spokesperson, adding, “That said, the second wave led to a nearly 50% decline in the total volume and value of transactions in May’21 as compared to January 2021 numbers due to lockdowns across the country. However, we have started to witness some green shoots during June’21, with a transaction value of contactless payments already at 67% level of what they were at the start of the year.” 

It is to be mentioned that the contactless payments industry was already booming even before the pandemic hit the country, due to the various schemes launched by the Government of India such as Cashless India under the flagship of Digital India campaign, that ensures digitalization in every sector.  

“The COVID-19 pandemic has resulted in a surge in interest for digital payment solutions and cashless and contactless payments are becoming the norm. One of the key growth drivers for Cashfree is our bulk disbursal solution – Payouts –launched in 2016 and surged by over 200% in FY21 on a YOY basis,” Akash Sinha, Co-Founder and CEO, Cashfree. 

Of late, some online retailers like Flipkart, etc. have also rolled out a QR-code-based payment facility for all their pay-on-delivery shipments to ensure greater safety for consumers to ensure greater safety for consumers at a time when people are looking to minimize personal contact and cash exchanges. 

“On our platform, the UPI adoption increased by 1.2x between Jan’21 to Jun’21,” affirms Ranjith Boyanapalli, Senior Vice President - Fintech and Payment Group, Flipkart, adding, “This new feature (of QR based payment) has already seen an adoption of 11% as consumers have started paying digitally at the time of delivery.  Likewise, in the words of Mahendra Nerurkar: CEO, Amazon Pay, “We witness contactless transactions gaining popularity for several everyday use cases for customers payment needs as well as experiences including regular household products, utility payments, mobile recharges, gas cylinder booking, electricity, insurance premium, home delivery of products & more. We are also enabling small & medium businesses that were previously transacting in cash to accept digital payments in all corners of the country. Towards this goal, we have enabled 5 million SMBs to accept digital payments through Amazon Pay Scan & Pay QR codes.” 

Avishek Banerjee

BW Reporters The author is a Principal Correspondent at BW Businessworld.