By Rohit Kumar, CEO & Co-Founder, Xpay.Life Pvt. Ltd
Amidst the coronavirus outbreak across the world, people are being urged to practice the concept of social distancing – not coming into contact with another person within a distance of 1 meter. The novel coronavirus (COVID-19) which has spread rapidly, plunging the world into a pandemic with over 300,000 cases worldwide. Research shows that the virus has the ability to survive on a number of surfaces including paper, metal, plastic and cardboard, thus increasing the risk of transmission by handling cash. This has driven people to switch to digital payments for their day-to-day transactions.
Over the recent years, the fin-tech industry in India, particularly the digital payments segment has grown leaps and bounds. According to industry experts, the digital payments sector in India is expected to become a USD 1 trillion market by 2023. The virus outbreak has only increased the adoption of digital payments across the country. Studies have been cited to show that currency notes increase the risk of virus transmission. With India’s count of positive COVID-19 cases exceeding 1000, the Reserve Bank of India has urged people to switch to digital payments in order to limit people’s visits to ATMs and their exposure to the virus.
Sector-wise impact on digital payments
The sector-wise impact of the virus has adversely impacted some businesses, but has also proven to be favourable to some. Industries like travel and aviation, hospitality, retail and food have taken a major hit, whereas Ed-tech, gaming, OTT and telecom have seen a drastic rise in their user base. This also results in affecting the digital payments for travel, retail and hospitality sectors. Airline bookings are reported to contribute 30% of all digital spending in value, and with the travel ban being imposed in various countries, there has been a significant downfall.
With more people availing subscription plans for OTT platforms such as Netflix, Amazon Prime and Hotstar, the digital payments segment has witnessed a boom from the consumers of these brands. Parents turning to ed-tech applications and broadband usage rising dramatically have also resulted in being a boon for digital payments.
Will this be a new turning point for digital payments in India?
During the demonetization period, the country witnessed a major rise in the number of people using digital payments. The government’s move to make India a cashless economy led to the widespread adoption of digital payments. Today, the country uses various digital payment methods including UPI transactions. This hold true not just for metro cities of the country but also the tier I, tier II and tier III cities. While the switch to digital payments during the demonetization period was sudden, the current shift appears to be more gradual and permanent.
Countries like China, the epicentre of the virus outbreak, have ordered cash notes to be disinfected using UV or heat, and pushed for more electronic payment methods to be followed. In India, the National Payments Corporation of India (NPCI) has begun a campaign named ‘India pay safe’ in order to boost the percentage of people using digital payments and avoid cash exchange.
While the pandemic has impacted the stock markets and the global economy, it has proven to be somewhat beneficial to the digital payment industry.
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