India Digital Payments 4.0: 2025 Outlook

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India’s digital revolution in the past two decades has significantly contributed to the adoption of digital payments in the country. Between 2015 and 2020, while digital payments grew nearly 10X in volume, mobile data use grew 24X, and m-commerce grew 2.4X. Emerging digital technologies, record FDI in payments fintech, and progressive policies will establish the payments revolution in India on an ever-more accelerated growth path by 2025.

Key Findings

Digital payments in India have leapt 160X in the past two decades

Volume of usage has accelerated every five years, and is likely to expand 16X, the highest, in the five years to 2025
India now ranks no. 1 in the world in terms of real-time digital payments transactions
From premium credit cards in early 2000s, the digital payments solutions of the future will focus on low-cost, mass-reach, interoperable platforms building on UPI success

Global, and domestics, macro trends are driving digital payments adoption

COVID-19 led to record digital transactions that will sustain in the future
Technology convergence, with APIs and cloud-native development, will further boost innovation and integrated offerings
Innovation in the cybersecurity realm will accelerate adoption with greater trust in the digital payments solutions
Expanding mobile and Internet subscriptions, and 5G rollout will prove catalytic in driving mobile banking and m-payments

Supporting business and ecosystem developments are supporting Payments 4.0 – the low-cost, mass-reach era

Digital commerce, particularly m-commerce, is likely to sustain 25-27% CAGR through 2025
India’s 60-70% population will move into urban centers with greater disposable incomes and consumption propensity
Fintech and traditional BFSI collaborations for seamless digital financial inclusion for all, along with RBI sandboxing initiatives, will drive innovations, such as the New Umbrella Entities (NUEs)

Policy and regulatory support from governments and the RBI will drive next leap of growth

Rationalization of transaction costs for cross-platform merchant payments
Secure data and enhanced fraud management frameworks
Simplified, centralized, and digitized KYC policy
Better payments infrastructure – interoperable and offline payments

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