Mobile payments in India are now growing faster than card payments as more consumers and businesses adopt digital payments amidst the pandemic, said the 2021 India Mobile Payments Market Report.

According to the report, payments made via apps that bypass credit card rails rose 67 per cent to $478 billion in 2020. They are clocking more than $1 trillion in annualised value in 2021.

“Payments handled by mobile devices are soaring in India, driven by the popularity of bank accounts as an in-app payment method,” said the report published by S&P Global Market Intelligence’s Financial Institutions Research team, adding that it expects mobile payments to continue to grow faster than cards due to growing consumer preference to use smartphones to pay.

By comparison, transactions completed using debit and credit cards, including online and in apps, fell 14 per cent to $170 billion in 2020. For banks, the ongoing pandemic shaved-off $524 million in credit card interchange revenue, as per its estimates, as consumers hunkered down amid lockdown measures.

“While most transactions handled by payment apps include peer-to-peer transactions, mobile payments are increasingly becoming a popular payment choice for retail transactions at the point of sale and online,” it further said.

It noted that demand for cash is slowing in the wake of rising mobile payment adoption. For each ATM withdrawal, Indians made 3.7 transactions using mobile phones in 2020. The report has also forecast that there continues to be room for rapid growth rates in digital payments in India in the next few years.

“Based on a review of instant payments in four large Asia-Pacific economies, India processed the highest number of real-time transactions in 2020,” it said, while noting that the country’s real-time transactions per capita of 16 in 2020 were the lowest in the group, which includes Australia, Thailand and Singapore.

Popular UPI apps

PhonePe and Google Pay continue to maintain their lead as the most popular UPI payment apps, with the two apps enjoying market shares of 44 per cent and 35 per cent, respectively, in the first six months of 2021, the report said. Together, the two apps handled more than 12 billion transactions worth $ 338 billion, it stated.

In contrast, Paytm and Amazon Pay accounted for just 14 per cent and 2 per cent, respectively, of UPI transactions. The report, however, said that it does not expect the dominance of PhonePe and Google Pay in UPI to last indefinitely. The National Payments Corporation of India has set a cap of 30 per cent on UPI volumes and PhonePe and Google Pay are the only apps that currently exceed the cap and have until 2022 to comply with the rules, it said.