In 7 years, cash will no longer be king for most Indians
NEW DELHI: In the next seven years, cashless or digital transactions will overtake cash transactions in India — the world’s fastest-growing internet economy — which hopes to add over 300 million internet users by 2020.
According to a report by Boston Consulting Group and Google, non-cash transactions will grow from the current 22% to 40% in 2020, and to 59% by 2025. “Mobile wallets will play a key role,” said Vikas Agnihotri, industry director, Google India.
To put things into perspective, cash in circulation in India is 18% of the country’s GDP. The figure is 3.5% to 8% for developed countries such as the US and the UK.
Wallets have burgeoned in recent times, with cellphones becoming an alternate for cash. A number of mobile wallet companies, including Mobikwik, Paytm, Freecharge, Itzcash and Suvidha, have sprung up, and there are currently 80-85 million active mobile wallet sin the country. In 2015-16, the number of wallets and pre-paid card transactions stood at 747 million, a 147% growth over the previous fiscal. The total value of transactions was ₹46,200 crore, with the average transaction being ₹618.
The largest chunk of cashless transactions will be person-to-merchants, about 40% by 2020, as wallet companies sign up more offline and online merchants, and cash-on-delivery goes down in proportion. “About 300 million internet users will opt for digital payments,” said Agnihotri.
Mobikwik already claims to have more than 100,000 merchants on its platform. “The wallet is being used for more than just recharging — pay, save, borrow and invest,” said Upasana Taku, co-founder, Mobikwik.
Paytm claims 4,00,000 offline merchants, including Mother Dairy booths and petrol pumps.
And with the RBI giving payment banks licence s to 11 entities, wallets and digital banks will see growth in villages, where internet will first be accessed on a mobile device, analysts said.
Paytm, a payments bank licence-holder, will first target villages in north India. A company representative will first take a picture of the person from his cellphone, and then scan his Adhaar card to offer basic banking services. “Once the money is in the wallet, he can buy grocery at shops or invest in mutual funds through the wallet,” said Shinjini Kumar, CEO, Paytm’s payments bank business.