Benefiting from the popularity of smart phones and the development of innovative ecology, the number of mobile payment transactions per capita in India increased from 2.4 person-times in 2014 to 22.42 person-times in 2019, and the proportion of mobile payment transactions in GDP increased from 7.14% in 2016 to 8.42% in 2018.
Over the past few years, all aspects of fintech — especially India’s fintech startup ecosystem — have grown rapidly. Fintech start-ups are also attracting a lot of attention from investors, thanks to their huge market potential. In India, telecom giant Jio launched a low-cost data service package, which in turn fueled the rise of the country’s digital, non-monetary and consumer Internet markets.
Ernst & Young has been publishing the Fintech Popularity Index since 2017, and India has been ranked above the global average from the start. In 2017, the global average was 33%, compared with 52% in India. By 2019, Ernst & Young ‘s fintech penetration index had found a global average of 64%, with India at 87% (already ahead of China) and Russia and South Africa at 82%.
The results are consistent with a CB Insights analysis a week ago that showed 23 fintech deals in India in the second quarter of this year, compared with 15 in China during the same period.
Figures from the Reserve Bank of India show that digital payments in India have more than tripled since 2015, reaching 22.4 transactions per head in the year to March. But that figure is still well below China’s.
Mobile payments have undergone a major transformation in the past five years with the proliferation of payments to UPI, mobile wallet, Bharat Interface for Money(BHIM), BharatQR and unstructured supplementary services data (USSD).
Meanwhile, according to KPMG’s “India mobile payment report 2019”, digital payment transactions in India will grow at a compound annual growth rate of 20.2% from 2019 to 2023, and are shifting to cashless countries.
KPMG says one of the key factors in transforming and democratizing mobile payments in India is the role of the wallet player. Convenience, universality, and convenience are the factors that lead to the widespread adoption of wallets.
KPMG added that the mobile wallet market is expected to continue to expand at a CAGR of nearly 52.2 % annum between 2019 and 2023.
The figures show that India and China have been at the same level of fintech investment sables and transactions since 2019. According to the definition of fintech in relevant reports, it mainly covers the fields of payment, insurance, personal finance, wealth management, capital market, remittance, mortgage, blockchain and regulatory technology.
In India, the main drivers of fintech adoption are middle – and high-income groups aged 20 to 35. According to the analysis, 96% of them are aware of payment and transfer services, 86% are aware of insurance, and about 71-78 percent are aware of financial planning, savings and loan services.
Not only that, as many as 94% of Indians know about payment and mobile transfers, 88% of them know that mobile payments are made in-store, and 85% know that non-bank P2P transfers are made.
Undeniably, the Indian market, with about 500m Internet users and 150 medium-sized companies, attracts fintech investors from around the world, while middle- and high-income people are the industry’s powerhouses.
Mobile payments can take off in the cash-dominated Indian market thanks to the adoption of smartphones, an infrastructure built by ecosystem players and friendly regulatory policies.