Third of Indian households use digital payments

Third of Indian households use digital payments

A third of Indian households use digital payments, with usage spread across income groups, according to a survey.

The National Payments Corporation of India (NPCI) and People Research on India's Consumer Economy (Price) surveyed more than 5000 households across 25 states on their use of digital payments.

Around half of the country's richest 20% of households use digital payments. Although the figure is lower for the poorest 40% of households, even among this group a quarter use the likes of mobile money.

In addition, the NPCI says that there is supressed demand from people who say they want to use digital payments but need education on how to go about this.

If this ‘ready’ demand is enabled through effective training and education, then over half of all Indian households - 151 million households - will become digital payment users, says the NPCI, with the poorest heavily represented.

The report also shows that smartphone ownership is becoming les of a bottleneck for the adoption of digital payments, with 68% of the respondents owning one, including 57% of the poorest households.

Meanwhile, the survey shows high levels of awareness of the NPCI-run Unified Payments Interface (UPI) as well as various apps that run on it. However, notes the corporation, there is potential to boost awareness that any bank or payment app can be used to make UPI payments to any UPI user.

Praveena Rai, COO, NPCI, says: "The report clearly establishes that in India today digital payments have gone well past the early adoption stage and have gained significant traction across the country, including the lower income groups."

Comments: (9)

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 18 January, 2021, 08:49Be the first to give this comment the thumbs up 0 likes

Per Medianama article referencing the same PRICE study, the percentage is 80%!

https://www.medianama.com/2021/01/223-npci-survey-digital-payments-increase/ .

I have heard of Shevlin Law where two different studies come up with two drastically different results. But this takes the law to the next level where same study comes up with drastically different numbers:) 

 

A Finextra member
A Finextra member 18 January, 2021, 10:44Be the first to give this comment the thumbs up 0 likes

Mr Swaminathan

What is the connectivity coverage in India between rich and poor?

In my view no connectivity no payment. If there is a solution whereby you can make payment independent of location without mobile coverage and internet but using existing devices will be very powerful to capture 60% of the unconnected(or financially excluded). Any views?

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 18 January, 2021, 11:06Be the first to give this comment the thumbs up 0 likes

Sure, all digital payment apps do require Internet connectivity. When I last checked, India had close to 700 million Internet users. That works out to ~3 Internet users per household, so that's not a limiting factor.

Other prerequisites for digital payment app usage are Smartphone and Funding Source, which are also not limiting factors, with 450M smartphones and 900 million debit cards in India. 

While on the subject, contrary to popular misconception, digital payment apps have no role to play in driving Financial Inclusion in India. That's because people must have a bank account to even onboard a digital payment app, let alone use it. Financial Inclusion has been driven by government programs like PMJDY etc., not technology. It has worked because 70% of banking industry in India is government-owned. 

A Finextra member
A Finextra member 18 January, 2021, 11:30Be the first to give this comment the thumbs up 0 likes

From your reply,  47% of the Indian population is not on the internet (assuming  India's population is 1.3 billion and 700 million connected for financial transactions and 600 million not connected for financial transaction), What could be the reason for this deficency and how to address?

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 18 January, 2021, 12:19Be the first to give this comment the thumbs up 0 likes

41% of India's population is below 18 years and can't have a bank account (on their own).

Even if we consider MINOR accounts held along with parents, as I said before, there are 3 Internet connections per household, so there's ample Internet connectivity available to everyone in the household (via tethered WiFi hotspot) to do digital payments.

So, virtually everybody in India is connected for financial transactions and I don't see any deficiency at all. 

A Finextra member
A Finextra member 18 January, 2021, 12:43Be the first to give this comment the thumbs up 0 likes

Many thanks for the reply- so according to your reply the entire rural areas and people earning less than ($22.50/Month) are on the financial infrastructure- this is not what we are hearing in the press and financial regulators!?  am I allowed to quote you?

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 18 January, 2021, 12:51Be the first to give this comment the thumbs up 0 likes

Given that India's Per Capita Income is $250/mo, I strongly doubt if there's anyone earning less than $22.50/mo, but, yes, you can quote me.

A Finextra member
A Finextra member 18 January, 2021, 13:21Be the first to give this comment the thumbs up 0 likes

Your response is not correct, Why?

https://www.hindustantimes.com/india-news/connectivity-gets-better-but-parts-of-india-still-logged-out/story-VSqXriMdGUudWb7eBcWzjN.html

70% of the Indian population live in villages. Digital payments is high take up in metros and service class only and not within villagres and  farming community.

I disagree with your hyped-up claims

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 18 January, 2021, 13:42Be the first to give this comment the thumbs up 0 likes

Most of the Internet connectivity in India is Mobile Data and that works fine enough in villages, not just metro areas. 

You can feel free to do whatever you want but it's silly to tell me that what I'm saying goes against media reports, then ask me whether you can quote me, then quote a media report that goes against what I said before, then tell me you disagree with my claims.

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