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 cards rose 67 per cent to $478 billion in 2020. They are clocking more than $1 trillion in annualised value in 2021.

“...we expect mobile payments to continue to grow faster than cards due to a growing consumer preference to use smartphones to pay,” said the report published by S&P Global Market Intelligence's Financial Institutions Research team.

By comparison, credit card transaction value in the industry dropped by 14 per cent in fiscal 2021. For banks, the ongoing pandemic shaved off $524 million in credit card interchange revenue according to its estimates, as consumers hunkered down amid lockdown measures.

“Mobile payments in India accelerated their lead over cards amid the Covid-19 pandemic. Large technology companies intermediating mobile payments are becoming financial supermarkets by cultivating partnerships with financial institutions and securing regulatory licenses.”

It also said 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.

It has also forecast that there continues to be room for rapid growth 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 was the lowest in the group, which includes Australia, Thailand and Singapore.

While PhonePe and Google Pay continue to dominate mobile payments, the report said it does not expect India's mobile payments market to become a duopoly like in mainland China, where Alipay and WeChat process the bulk of mobile payments.

“Payment fintechs with business-to-business models burn significantly less cash than their consumer-facing brethren,” it further said, adding that large fintechs that work closely with large and small enterprises are poised for overseas expansion and business diversification.