Mobile wallet payments are expected to grow at a compound annual growth rate (CAGR) of 42.7% between 2021 and 2025 and reach INR305.6 trillion ($4.1 trillion) in 2025 in India, said a study.
"Mobile wallet payments are becoming the ‘mainstream’ payment method in India and gradually displacing traditional payments such as cash and cards. The COVID-19 pandemic has accelerated the growth further," said the study by GlobalData.
Mobile payments data in India includes transactions made using Unified Payments Interface (UPI) and preloaded and card-linked mobile wallets.
According to GlobalData’s Payment Instrument Analytics, mobile wallet payments by value is expected to grow by 69.8% in 2022 to reach INR125.1 trillion ($1.7 trillion).
The Indian government has been taking several initiatives to boost digital payments in the country and reduce the use of cash, as part of its ‘Digital India’ programme. It has mandated all mobile wallets and QR-codes to be interoperable, effective from 1 April 2022 to enable convenient mobile-based payments across any merchants.
The report said that the government also introduced the Payments Infrastructure Development Fund (PIDF), in January 2021 to offer subsidies to merchants for setting up infrastructure for acceptance of card and QR-based payment. As of November 2021, 5.5 million digital devices were deployed at merchant outlets for QR code-based payment acceptance with support from this fund.
The significant growth in mobile wallet transactions has seen the proliferation of mobile wallet brands, with each competing to get a pie of this market. Some of the popular brands are PhonePe, Google Pay, and Paytm.
GlobalData senior payments analyst Sowmya Kulkarni said: “Mobile wallets have now become an integral part of Indian consumers payments and are also preferred by merchants of all sizes, from big supermarkets to neighbourhood ‘kirana’ shops. This growth has been largely driven by state-backed instant payment system UPI, which enables users to make payments directly from their bank accounts using recipients’ mobile number or scanning QR code.”