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The first quarter of 2022 found the Indian economy continuing on the robust recovery trends, the positive impact of which is being felt across each of its sectors. In consonance, the maturation of the country's payment industry continues unabated, making simplified digital payment solutions available at scale for businesses and their customers alike. Today, the focus is higher than ever on innovations around Tokenization, UPI and Bharat QR, Tap on Phone, embedded payments, and digital currency.
As always, Worldline, a global leader in digital payments, is at the forefront of these influential megatrends, boldly scripting its success stories. For us, 2022 commenced with optimism as we have enhanced our portfolio with new variants of Android and Linux-based POS terminals and secured a handsome 50% y-o-y growth in SMB vertical. Also, we have developed close tie-ups with urban administrations and law enforcement agencies for digitizing small ticket size transactions. Topping the stack, industry veteran Ramesh Narasimhan has become India CEO to drive the company's growth efforts in the days ahead.
You will find a complete bouquet of relevant insights on India's digital payments landscape in Worldline's uniquely succinct style between the covers of the India Digital Payments Report Q1 2022. While you can always download the document, we understand if you are too pressed for time at the moment.
However, that doesn't mean we will let you miss out on the excitement of being in the know! Therefore, we implore you to read on and find the key highlights from the report:
•Open Network for Digital Commerce (ONDC), an idea in the making: A strategy paper released by the government in January 2022 speaks of altering the existing digital market structure from the conventional operator-driven model to a facilitator-driven model for fuelling e-commerce growth in India. The document indicates a highly agile, decentralized, open, and interoperable architecture that empowers hitherto unconnected merchants to go online with their shops. The ONDC aims to onboard 30 million sellers and 10 million merchants in Indian cities by August 2022, triggering favorable responses from several quarters.
•Beginning of another strong year for UPI: UPI sustained its bull run in Q1 2022. clocked over 14.55 billion transactions in volume and INR 26.19 trillion in value. The transaction volume and value were 99% and 90%, respectively, compared to Q1 2021. While in Q1, the top remitters and beneficiaries were the well-known names from India's public and private banking sector, PhonePe, Google Pay, Paytm Payments Bank App, Amazon Pay, and Axis banks App ruled the roost with their UPI apps.
•Growth in POS terminal deployments: Q1 2022 has started brightly for the merchant acquiring, with POS terminal deployments, demonstrating a 28% hike during the period as compared to 2021. Here, private sector banks dominate the market with a 70% share, with financial institutions like HDFC, Axis, and ICICI in the lead. While Axis Bank aced its segment with over 68% growth, State Bank of India is the single largest POS terminal deployer in the public sector, cornering 15% of the market. The Worldline Insights Labs found Hyderabad, Bengaluru, Chennai, Mumbai, Pune, Delhi, and Kolkata among the top cities with the highest number of transactions at physical touch points in Q1 2022 for its systems. Further, FMCG, Hospitality, Pharmacy, ecommerce, and gaming represented the most actively transacted business verticals across the physical and online categories.
•The story of plastic: The total number of credit and debit cards in circulation by the end of Q1 2022 was estimated to be over 990 million, with the growth of the outstanding credit cards grossly outpacing that of the debit cards. During Q1 2022, about 23 million debit cards were withdrawn from the system, probably due to a blanket inactive account closure initiative. While HDFC Bank, SBI, and ICICI Bank secured the top 3 tiers as credit card issuers, SBI, BOB, and Union Bank did the same for the debit card segment. Notably, as part of its recent Master Directions, RBI has now lifted the ban on Mastercard Asia from onboarding domestic customers fueling anticipations around the growth in issuance numbers.
An analysis from the Worldline Insights Labs witnessed that while for credit cards, the online and physical transaction volumes are nearly equal, the former grossly outmatches the latter in terms of value, indicating an apparent push towards the growing digitization of payments in India. However, this trend is inverted in the case of debit cards, wherein transaction value through POS terminals stands at a whopping INR 1.15 trillion, spread across 585.11 million purchases. The trend indicates that debit cards are the instrument of choice for small-ticket purchases at physical touchpoints.
•The convenience of prepaid payment instruments: Market research suggests that card spending will reach $89 billion by 2025. During Q1 2022, the growth of prepaid cards outmatched that of mobile wallets by over 40%. However, Worldline found that mobile wallets are steadily being used for the purchase of goods and services as well as fund transfers.
•Growth of web-based payments: In India, the exponential growth of mobile and internet-based payments are aligned with the explosion of the country's internet user base. In the nation of 658 million internet users and about 1.2 billion mobile subscribers, over INR 207 trillion has been transacted through both the channels during Q1 2022. However, continuing on the trend of 2021, while mobile payment remains the preferred solution for a small ticket, high volume transactions, bulk transfers were mainly done through the internet browsers.
•Revolutionizing travel: The introduction of NETC FASTag has positively impacted both the volume and value of the National Electronic Toll Collection with a hike of 49% and 41%, respectively. As the NETC FASTag use cases proliferate beyond toll collection across national and state highways, these trends are expected to consolidate further. ICICI Bank and SBI remain their respective sector leaders in issuing FASTAgs.
•Redefining utility payment: The Bharat Bill Pay ecosystems have demonstrated remarkable maturity registering a growth rate of 117% and 134% in volume and value, respectively, in Q1 2022 over the last year. As of March 2022, Axis Bank, ICICI Bank, and Kotak Mahindra Bank remain the top BBPOUs, while Electricity, FASTag recharge, and Mobile Postpaid verticals constituted 80% in volume and 76% in value for BBPS transactions as of May 2022. Notably, to make the ecosystem more competitive, RBI has reduced the net worth requirement for non-bank BBPOUs to INR 250 million from INR 1 billion earlier.
These and many more thrilling updates from India's digital payments industry corridors await in Worldline's India Digital Payments Report Q1 2022. How should you prepare your business to make the most of the opportunities ahead? Start by downloading your copy today by clicking on this link!