Digital payment transactions saw a 23 percent jump in the past one month, signalling a rebound after the decline seen during the nationwide lockdown, according to a report by fintech platform Razorpay.
The report analysed consumer behaviour and digital spending patterns during lockdown and in the later days.
“With the economy inching towards normalcy, digital payment transactions have rebounded by 23 percent in the last 30 days (June 3-July 2). The overall digital transactions declined by 12 percent in the last 101 days, compared to a 30 percent drop in the first 30 days of lockdown (March 24-April 23),” the report said.
It added that sectors like logistics, real estate, and healthcare were starting to see some normalcy.
“Due to stress in income across households, consumer payment behaviour has changed. Paylater, cardless EMI, and EMI have become preferred payment modes with a growth of 290 percent, 178 percent, and 125 percent, respectively,” it said.
According to the report, UPI continued to be the preferred mode and grew 43 percent, while use of cards was up by 40 percent and net banking by 10 percent.
Mobile wallet transactions, particularly in Tier II cities (via AmazonPay, JioMoney and Paytm) saw a spike, owing to increased contribution towards PM-CARES Fund and cashback offers, it added.
Harshil Mathur, Chief Executive Officer and Co-founder of Razorpay, said the digital payments industry could not escape the pandemic crisis, and a dip of 30 percent was witnessed in online payments since the lockdown began.
“And now…a rebound of 23 percent over the last 30 days is a sign of gradual revival of the digital economy. After witnessing an increased demand for digital payments in Tier II and III cities, I believe COVID-19 has definitely propelled the final push to overthrow cash, which even demonetisation couldn’t, as Indians now become more comfortable paying for services without cash,” he added.
Harshil said COVID-19 was forcing sectors to digitise, as businesses could be closed for a long period of time and social distancing was here to stay for the next 12 months at least. Small and medium businesses and consumers were beginning to realise the friction and frustration involved in handling cash after having experienced seamless digital payments, he added.
“But, for this to happen at scale, the government’s constant push to digitisation through necessary education, digital rewards, and incentives may not be enough.
“It needs to be clubbed with intelligent innovations in financial transactions focused on improving customer experience such as facial recognition technology, possibly wearables, hearables, and implantables along with investment in business banking platforms (neo-banks),” Harshil noted.