Card payments in India are gradually recovering on the backdrop of an increase in consumer spending as the country has now entered the unlock phase, says GlobalData, a leading data, and analytics company.
According to GlobalData’s revised forecasts, the value of card payments in India is estimated to grow by 8.4% in 2020. The value is expected to reach INR29.1 trillion (US$408.1bn) by 2024 increasing at a compound annual growth rate (CAGR) of 14.1% between 2020 and 2024.
The fear of COVID-19 spread through the handling of cash is driving consumers towards digital payment tools. According to the country’s central bank ‘Reserve Bank of India’, the number of cash withdrawals declined by almost 50% in April 2020, compared to the previous month.
While the government has been easing lockdown restrictions, the surge in daily active cases is a key challenge. India now has the third-highest COVID-19 cases in the world, behind only the US and Brazil.
Nikhil Reddy, Banking and Payments Analyst at GlobalData, comments: “The COVID-19 pandemic and the resultant economic lockdown badly affected several major sectors. The country is now entering into unlock phase with government allowing inter-state travel (buses, trains, and airlines) and resumption of business activities on a large scale. This will provide a much-needed push to the affected sectors like tourism, hospitality, and retail, which in turn will benefit the payments market as well.”
The gradual easing of lockdown in a phased manner facilitated the opening up of shops providing non-essential goods and services from 25 April 2020. This was followed by allowing e-commerce companies to deliver non-essential items even in red zones (where cases are high) from 18 May 2020, followed by the resumption of domestic airline services from 25 May 2020.
Mr. Reddy concludes: “India has traditionally been a cash-based economy. The current COVID-19 outbreak will act as a catalyst to accelerate the shift towards cashless payments in the country, which is already riding the digital wave since the government’s demonetization move way back in 2016.”
