Digital payments may be new to India, but the industry is set to grow tenfold in the next four years, thanks to the craze for smartphones.
Asia’s third largest economy will have a $500 billion digital payments market by 2020—contributing 15% to India’s GDP, said a report published July 25 by Google and Boston Consulting Group (BCG).
In India—where nearly half of the population is unbanked and does not have access to financial tools like credit cards—the digital payments market is currently estimated at between $40 billion and $50 billion.
“Spurred by smartphone penetration, and supported by progressive regulatory policy, the digital payments industry is at an inflection point,” said Rajan Anandan, vice president and managing director of Google, Southeast Asia and India. “It is telling that half of India’s internet users will use digital payments.”
The Google-BCG report is based on research executed by Nielsen, which surveyed 3,500 respondents across nine Indian cities including Delhi, Mumbai, Bengaluru, Ludhiana, Lucknow, Indore, Surat, Vishakapatnam and Coimbatore.
The report said that 81% of the existing users of digital payments prefer it to any other non-cash payment methods. Digital payments are most commonly used in India for online shopping, payment of utility bills and buying movie tickets.
Convenience is the top reason why Indian consumers are taking to digital wallets, the report said. It highlighted several other reasons why some Indian consumers opt for digital payments and why others don’t: