India is rapidly shifting to digitalization. About 66.6 billion transactions worth USD 270.7 billion are expected to shift from cash to cards and digital payments by 2023 in India, and further increase to USD 856.6 billion by 2030, a report by Accenture said on Tuesday.
The COVID-19 pandemic has shifted the dynamics of banking. This rapid shift to online payment is urgently increasing the need for banks to modernize the payment system, also enhance the consumer experience with digital payment, the report, titled ‘Playing the Long Game in Payments Modernisation’, said.
The report is based on a survey of 120 payments executives at banks globally regarding the transformation of their payments business, as banks make multi-year investments to compete with non-bank digital-payments providers and comply with new regulations.
Conducted between July and August this year, the report surveyed markets including Australia, Brazil, Canada, China, India, Norway, Singapore, Thailand, the UK and the US. It noted that the expected drop in cash volume is based on GlobalData and Accenture Research assumptions.
Also, the forecast of non-cash transactions in consumer spending is calculated using cash evolution data and MSC rates provided by GlobalData. The report forecasted that nearly 420 billion transactions worth USD 7 trillion, globally are expected to shift from cash to cards and digital payments by 2023 – and increase to USD 48 trillion by 2030.
It is said that in 4 months of launching its payment app, Google Pay is processing the same number of transactions as Axis bank and has resulted in UPI transactions increasing about 8 times.
“COVID-19 has accelerated the shift to digital payments at a pace banks could not have predicted. The pandemic will permanently change how consumers shop and pay for products as they prioritize convenience above all else,” Sulabh Agarwal, who leads Accenture’s Payments practice globally, said. He added that banks’ investments in new payments systems have also focused on the way of the changing consumer dynamic and improving the customer experience.
“While India has been ahead of the curve in terms of real-time digital payments infrastructure driven by UPI and 24×7 NEFT, the pandemic has led to a further increase in digital, contactless payments as consumer behavior has undergone a shift,” Sonali Kulkarni, Lead – Financial Services, Accenture in India, said.
With newer players launching their payments offerings and increased uptake of ‘Buy Now Pay Later’ schemes, consumer experience, and convenience is bound to improve significantly, she added. “Banks in India have been making multi-year investments to modernize their payments systems, and going forward, we expect them to strengthen these investments to scale up and improve the resilience of their digital payment operations,” she said.