The indian payment gateway industry is likely to grow with a CAGR of 15% before the end of 2025. But how is this possible despite the shattered economy due to the Covid-19 pandemic? Let’s find out!
The Indian payment gateway market is likely to register a growth of 15% CAGR by 2025.
Online payment gateways have become an integral part of all kinds of businesses across all niches. It is one of the best payment technologies that has completely transformed the way transactions are conducted. They enable merchants to collect payments through the preferred payment method of customers without sharing private data. With the increased use of the internet and the advent of government initiatives like Digital India, customers have become more aware of the importance and benefits of making online transactions.
The hassle-free online transactions offer security, safety and ease of making payments to the users. This is the main reason why Indian payment gateway services are gaining huge popularity and fueling the country’s economy.
According to TRAI, the total number of internet users in 2019 was 687.62 million and the volume of mobile payment transactions in 2018 was listed at 10 billion dollars by the RBI. This data clearly shows the increase of online payment trends is directly associated with the increased internet penetration.
The Indian payment gateway industry is accelerated by the digital payment trends across the country and the entire world. Government initiatives are playing a major role in enhancing the online payment space and stepping towards a cashless economy. Digital India for example, is doing a great job in making India a digitally empowered nation.
Major Reasons Behind The Growth Of Indian Payment Gateway Market
Demonetization is an extremely bold currency culling step taken by the government of India in November 2016. This exercise has made a whopping 86% of currency circulating in the market invalid. The main aim behind launching this scheme is to put a brake on black money, counterfeit currency and terror financing. This was the major push for adopting the payments gateways in the nation.
For example, during the week of demonetization itself, Paytm has seen a rise in the number of downloads and ten times increases in the usage of Paytm wallet.
2. Hassle-free Online Payment Methods
Online payment methods like UPI, digital wallets, electronic cards, etc. have revolutionized the payment systems in the country. Interestingly, Unified Payments Interface or UPI has single-handedly left all other payment methods behind. A big majority of users today prefer making payments through UPI and this encouraged merchants to use UPI enabled payment gateways. These payment methods have gained even more traffic since the coronavirus outbreak where contactless transactions have become the need of the hour.
3. Rise of E-commerce Industry
The rise of the eCommerce industry in India is visible to the entire world. Today, almost 80% of the users prefer shopping online by making digital payments. While the cash on delivery option is still available, customers rarely use it. Increased e-commerce transactions have led to the wide adoption of payment gateways in the country. The Brand Equity Foundation has discovered that the Indian Ecommerce industry is on peak and will soon surpass the United States to become the second-largest eCommerce industry on the globe by the end of 2034.
4. Increased Competition
The Indian payment gateway industry is highly competitive in nature. The leading companies are planning acquisitions and mergers, powerful partnerships, increased collaboration to gain a competitive edge in the market. For example, WhatsApp has already launched its own payment gateway known as WhatsApp Pay recently in 2020.
5. Other Regulatory Standards To Accelerate Market Growth
The latest guidelines issued by the Reserve Bank of India regarding Payment Gateways and Payment Aggregators have played a major role in boosting the Indian payment gateway services. The new RBI guidelines not only aim at protecting the funds of customers but also express the recognition of Payment Gateways as authorized bodies and grant control and flexibility for fund management and operations.
6. Covid-19 Outbreak
Believe it or not, Covid-19 is a major reason behind the booming growth of the Indian payment gateway industry in the last one year. While this pandemic has shattered many brick and mortar businesses, it has brought many advantages to the payment gateway services. In fact, payment gateways are acting like the saviours of the Indian economy. Many businesses are able to keep up with the market and manage to make profits due to payment gateways. And the ones that are using these services have totally collapsed. No one knows when this pandemic will end, but if businesses keep leveraging the capabilities of payment gateways, they will be able to overcome this deadly phase efficiently.
All these factors are leading the Indian payment gateway industry to become a major driver of the country’s economy. If everything goes as per the stats, nothing can stop the Indian payment gateway market to flourish and thrive.