Home / Industry / Digital payments in India to touch Rs1.2 trillion by Dec: report

New Delhi: Digital payments in India is expected to touch Rs1.2 trillion by December 2014, a 40% increase from Rs85,800 crore the previous year, propelled by growing Internet penetration, growth in e-commerce and the ease of online payments, according to a report by the Internet and Mobile Association of India (IAMAI).

The market for payments made through digital medium has grown at a compounded annual growth rate (CAGR) of 10% between 2010 and 2013.

The report titled Digital Money is IAMAI’s first such on digital payments and was prepared in association with the Payments Council Of India (PCI) and IMRB. The report states that nearly 60% of the total value of transactions in 2013 came from online travel, 23% from financial services and 12% from online retailing. Nearly 80% of these transactions were dominated by desktop personal computers and laptops, with smaller contribution from mobile phones and tablets. However, the report expects phones and tablets to contribute close to 30% by 2020.

The four metros—Delhi, Mumbai, Kolkata and Chennai—contributed about 60% of the total digital payment gateway market size, followed by Bangalore, Hyderabad, Ahmedabad, Pune which together contributed 25% in 2013. The report said that about 53% of the 800 million online transactions made in 2013 were made using credit and debit cards while 44% came from Internet banking. The rest were attributed to Mobile Wallet, Pre-Paid Cash cards and Immediate Payment systems (IMPS) over the Internet.

Given the higher penetration of debit cards compared to credit cards in the country, about 32% of the transactions were made through debit cards while 21% came from credit cards.

According to a Reserve Bank of India (RBI) report published in February 2014, there were nearly 350 million debit cards compared to 19 million credit cards. Credit card penetration in India has been on a downward journey and the cannibalisation is benefiting debit cards and Internet banking. In 2012, the number of credit cards were 10-15% higher than what it was in 2013 as banks are restricting the issuance of credit cards due to credit risk and higher non performing assets (NPAs), according to Vishwas Patel, chairman of PCI.

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