The New Normal in a Brave New World
How Digital Payment Trends changed in the wake of Covid-19
The previous year was nothing short of a rollercoaster, and much like everything else around the globe, digital payments saw a marked shift last year. As cash payments became unsafe, contactless transactions became significant to small and big businesses alike. Right from tiny kirana stores to multi-storey supermarkets, QR stickers were visible at every counter. The use of digital payments for recharges, bills, investments, EMI payments, etc. across all demographic segments also saw a rise as we grappled to maintain normalcy with our utilities and finances. We might not have realised it at the time, but this phase could profoundly change the way we pay, steering users away from cash and making digital payments sticky.
Keys, Wallet, Sanitizer, Mask & PhonePe
Many of us were very reluctant to leave the house last year and when we did, this was our checklist. The transaction categories that require people to queue up regularly saw the biggest growth digitally - Recharges & Bill Payments, and Offline Merchant Transactions. These categories managed to undergo a convenient transition to digital. This, coupled with safety, made them ubiquitous.
Growth of Merchant Transactions
PhonePe Merchant Transaction Trends
Post the first nationwide lockdown in April-May 2020, the Offline transactions category grew steadily month-on month, until March 2021. As the nation unlocked from May 2020, growth in this category was enabled by two main factors - consumers preferring contactless QR payments over cash for safety reasons, as well as sustained efforts by PhonePe in increasing the acceptance of digital payments at offline stores. While this category saw a dip in transactions in Apr 2021 and May 2021, due to a series of statewide lockdowns, our analysis indicates that the number of customers transacting at offline outlets did not show a significant change, and therefore, the dip is largely due to stores being shut. In fact, in June ‘21 offline payments have begun recovering, and are again on a strong growth path post the unlocking of the economy.
The rise of Online Recharges & Bill Payments
Recharges and Bill Payment transactions on PhonePe
The year 2020 saw a historic transition from cash to UPI in all sectors and categories. As more Indian consumers prioritise contactless payments over cash due to high-risk factors, the behaviour is bound to solidify with time - growing digital payments by leaps.