December 28, 2018
The fact that Indians are comfortable making C2G (citizen-to-government) payments online – which were traditionally made in cash – shows how far we have come in our quest for a truly Digital India. Not just transaction volumes – behaviors, and hard-set notions about digital payments have turned on their heads post demonetization.
As 2018 draws to close, let’s quickly look at how the year was:
The Supreme Court’s verdict of striking down Section 57 of the Aadhaar Act ensured that private companies cannot mandate customers to provide Aadhaar for onboarding. While this proved to be a positive verdict for the masses, it was not as pleasant for the industry. It has increased the cost of doing business and also affected the subscriptions industry and recurring payments.
On the flip, UPI is gaining significant momentum and the launch of UPI 2.0 was much anticipated. It has already transformed itself from a P2P payment mode to a merchant-first platform.
What To Expect In 2019
UPI 2.0 will become mainstream – UPI will not only drive larger transaction volumes but also significantly increase P2M adoption. From contributing 2% of the total GMV in January this year, UPI grew to 12% in November on Razorpay’s platform, whereas the GMV share of cards fell from 74% in January to 55% in November. From 30mn UPI transactions in September 2017 to 405 Mn in November 2018, UPI will become the de-facto method for all online payments by 2020; for all you know, UPI handle may soon be used as a credit card, too.
A Clean Sweep by WhatsApp – The launch of UPI payments on WhatsApp would take UPI mainstream, enabling a huge chunk of the Indian public, down to the smallest cities, have access to digital payments on a trusted platform.
Wealth management will trend, expect an increase in adoption of mutual funds – As the average Indian’s disposable income increases we see them spending more online and the likelihood of Indian households investing in stocks and mutual funds will rise further. It will be interesting to watch how the mutual funds industry will revolutionise next year.
We can also expect growth in loyalty programs and subscription platforms – the Zomato Golds and the Swiggy Supers will continue to entice more consumers as they offer tailor-made solutions for day-to-day issues.
“This year saw a fairly pronounced shift in the acceptance of digital money from both, businesses and consumers. 2019 will also witness AI driven API platforms move beyond just handling transactions to providing real-time financial insights for SMEs and fundamentally transform how businesses move money. Next, I believe the SME lending space will evolve with lenders enabling instant and easy access to funds, thereby solving liquidity and cash-flow challenges of SMEs. I am as thrilled as everyone else to see how FinTech will shape 2019,” Harshil Mathur, CEO and Co-founder, Razorpay said.
However, there is something we should all watch out for – The elections! One, RBI regulation will impact the roll-out of policies. Two, chances are investors may go slow and cautious on funding startups. Three, businesses will have to look for alternatives to Aadhaar-based digital KYC to ensure that the pace of work and the consumer experience are not compromised.
While we can expect important changes and a watershed moment or two, all these improvements will be channeled towards digital inclusion and financial stability, making for a great 2019!