Mobile wallet payments have seen exponential growth with acceleration due to the COVID-19 pandemic. Global Data, a leading data and analytics company has forecasted that the modern payment method will gradually supersede traditional payments such as cash and cards and surpass $4 Trillion in 2025.
As a part of the government’s ‘Digital India’ program, the government has been taking several initiatives to promote digital payments in the country and reduce the use of cash. The government 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 "Digital India' program's vision is to transform India into a digitally empowered society and knowledge economy.
Sowmya Kulkarni, the Senior Payments Analyst at GlobalData, commented: “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.”
Against the backdrop, mobile wallet payments are predicted 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. 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).
This significant growth in mobile wallet transactions has seen an influx of mobile wallet brands, with each brand competing to get ahead in the market. Some of the popular brands are PhonePe, Google Pay, and Paytm.
Kulkarni concluded, “Mobile wallets market in India is in a high growth phase. Government’s push and improving mobile payment acceptance infrastructure will further drive the usage of the mobile wallet, thereby helping the government’s broader objectives to become a less-cash economy.”