Global leader in the payments industry and the technology partner of choice for many, Worldline has released India's Digital Payment report for Q1 2022. It has analysed the transactions available in public databases as well as transactions processed by them in the first quarter (January - March 2022) and derived some unique insights. Below are the insights of the report:
How India Pays?
In Q1 2022, 9.36 billion transactions amounting to INR 10.25 trillion were processed through payment modes like Debit and Credit cards, Prepaid Payment Instruments like mobile wallets and prepaid cards, and UPI P2M (Person to Merchant). UPI P2M transactions emerged as the most preferred payment mode among consumers with a market share of 64% in volume and 50% in terms of value. This is not altogether surprising given the growth of UPI. However, 2 points of note. Credit cards accounted 7% of transactions but 26% of value indicating that customers still prefer to use their credit cards for high value transactions. Debit cards account for 10% of transactions but 18% in value - the volume and volume has shrunk from previous years and is likely because of the rise of UPI.
Unified Payments Interface
In Q1 2022, UPI clocked over 14.55 billion transactions in volume and INR 26.19 trillion in terms of value. Its transactions volume and value has almost doubled since last year recording about 99% increase in volume and over 90% increase in value compared to Q1 2021. In Q1 2022, the top remitter banks were State Bank of India, HDFC Bank, Bank of Baroda, Union Bank and Paytm Payments Bank while the top Beneficiary Banks were Paytm Payments Bank, State Bank of India, YES Bank, Axis Bank and ICICI Bank.
As of Q1 2022, the top UPI Apps in terms of volume were PhonePe, Google Pay, Paytm Payments Bank App, Amazon Pay, Axis banks App while top PSP UPI Players were YES Bank, Axis Bank, State Bank of India, HDFC Bank and Paytm Payments Bank. Among the top UPI Apps, Phone Pe, Google Pay and Paytm accounted for 94.8% of UPI transactions volume and 93% of UPI transactions value as of March 2022.
Top POS deployers: HDFC Bank, Axis Bank, ICICI Bank, State Bank of India, RBL Bank, Paytm Payments Bank, IndusInd Bank, Union Bank of India are the top acquiring banks with significant market share in terms of POS deployment. In terms of POS market share, Axis Bank and ICICI Bank witnessed a growth of over 68% and 52% respectively in Q1 2022 when compared to Q1 2021. Paytm Payments Bank too registered a growth of 66% to be amongst the top banks deploying POS terminals.
Worldline in India Insights
In Q1 2022, frequently visited physical merchant categories like grocery stores, restaurants, clothing and apparel, pharmacy and medical, hotels, jewelry retail, specialty retail, household appliances and departmental stores together accounted for over 60% in terms of volume and about 58% in terms value. In the online space, e-commerce (shopping for goods and services), gaming, utility & financial services contributed to over 85% transaction in terms of volume and 47% in terms of value.
Transaction analysis of Credit cards
In Q1 2022, Credit cards volume and value stood at 2.02 billion and INR 8.77 trillion respectively. The number of credit card transactions at POS accounted for 305.83 million while e-commerce was 302.13 million. In terms of value, consumers transacted INR 1040.03 billion at POS and INR 1770 billion at ecommerce via credit cards in Q1 2022. Even though credit cards volume at POS and ecommerce are nearly equal, value of ecommerce transactions is significantly higher as compared with value of transactions at POS. This is in line with the general trend of transactions moving from the physical to the digital space.
Transaction analysis of Debit Cards
In Q1 2022, debit card transactions volume and value stood at 942.7 million and INR 1.81 trillion, respectively. Out of the total debit card volume, transactions at POS were 585.11 million and ecommerce were 357.6 million. In terms of value, INR 1.15 trillion was processed at POS terminals while INR 667.23 billion was through e-commerce transactions.
The inference is that consumers are getting more comfortable to make online purchases via credit cards for big ticket size transactions while debit cards are more frequently used for small ticket size purchases at physical touchpoints. Value added services like EMI, BNPL are enabling customers to opt for high value products and services using their cards. Whitepaper titled 'India taps into a Contactless future' published by Visa and Worldline India highlights that during peak COVID-19 times, the number of domestic F2F transactions grew only by 6.25%, but contactless transactions in March 2021 grew by 28.5%, compared to March 2020. According to Worldline data, while 25% of all transactions at supermarkets were contactless in January 2020, these transactions rose to 31% by January 2022.
Mobile and Internet Based Payments
As of January 2022, there were about 658 million internet users and about 1.2 billion mobile subscribers in India. In Q1 2022, consumers made 15.6 billion mobile based payments whereas Net Banking / Internet browser-based transactions were over 1 billion. In terms of value, INR 44.68 trillion was transacted through mobile while INR 163.53 trillion was transacted through the internet. It is to be noted that while internet browser-based payments comprised 6% in terms of volume, its share in value terms was 84% while mobile payments accounted for the rest.
The takeaways are; mobile payments have become widespread and being used for small ticket transactions while internet browsers are the preferred mode for traditional shopping from e-commerce platforms.