When it comes to digital payments, India is already outpacing the world. Figures provided by Reserve Bank of India show that digital payments almost doubled between fiscal year 2019 and fiscal 2021—and the numbers are forecast to go even further in five years.
Digital payments value expected to grow 3-fold by FY26
In his written reply to a question in Lok Sabha, Union Minister of State for Finance Bhagwat Kisanrao Karad highlighted how the volume of digital transactions in the country have already reached 4,374.45 crore in FY2021, almost double the 2,326.02 crore digital payments recorded in FY19.
And the figures are expected to go up. A CLSA report forecast a three-fold growth in the value of digital payments in India to touch $1 trillion by FY26.
Analysts at CLSA attributed the growth in digital transactions volume to the government’s push to increase financial access in the country via no-frills bank accounts, the Aadhaar card and mobile connection.
“UPI [Unified Payments Interface] comprises 60 percent of total payments by volume and digital payments have risen from $61 billion in FY16 to $300 billion as of FY21,” the CLSA report noted. “Given increases in online purchases and digital adoption, we expect digital payments to grow to $900 billion-1 trillion by FY26, or 30% of India’s consumption.”
The expansion of online consumption also plays a major role in the aggressive growth of digital payments in India. With the pandemic showing no signs of ending anytime soon, more consumers are moving towards digital environments to complete many of their daily activities from the safety of their homes, particularly recreation and entertainment. And among these many forms of online entertainment, online betting has posted remarkable numbers—a 35 percent increase in the number of real money games played on a monthly basis by an average user during the pandemic, according to an ENV Media report on how the gambling industry has been faring in light of COVID-19.
Digital India initiative ushers in ‘new age of prosperity’
Online gaming is one of the fastest growing industries in India today, thanks to the wide availability of affordable digital tools coupled with the government’s Digital India push. Even online lottery in India is gaining traction among players of what is considered to be the most popular form of gambling in the country, especially in light of the continued lockdowns caused by the pandemic.
As analysts at ENV Media explained, “…the Government has been pushing its Digital India agenda as a way to bring India into a new age of prosperity. This flagship government-supported program aims to transform the country into a ‘digitally empowered society’. The plans of both the public and private sector, therefore, are for the online entertainment sector to continue growing.”
It’s worth noting that India is already the highest in the world when it comes to digital payments, registering over 25.5 billion real-time payment transactions in 2020. This is 60 percent higher compared to China. CLSA analysts expect that around 44 percent of payments will be accepted via payment gateways and aggregators in FY26, followed by QR Codes (34 percent) and Point of Sales (PoS) machines (22 percent).