Mobile payments initiated by apps, comprising account-to-account transfers and payments made from stored-value accounts, rose 163 per cent to USD 287 billion in 2019, a report by S&P Global Market Intelligence said on Tuesday.
The 'India Mobile Payments Market Report' noted that point-of-sale transactions completed using debit and credit cards, including online and in apps, rose 24 per cent to USD 204 billion.
"While a large number of transactions handled by payment apps include peer-to-peer transactions, mobile phone account recharges and utility bills, mobile payments are increasingly becoming a popular payment choice for retail transactions at the point of sale and online," it added.
Interestingly, ATM withdrawals — for the first time — came in lower than card and mobile payments based on value in 2019. And, for each ATM withdrawal, Indians made more than two transactions using either cards or mobile phones, it said.
High growth rates in cashless payments seen in recent years are unlikely to repeat amid an economic slowdown due to the coronavirus pandemic, S&P Global Market Intelligence Fintech Analyst Sampath Sharma Nariyanuri said.
"However, we expect mobile payments to be more resilient and will gain a bigger lead over card payments, as their uptake will accelerate due to ongoing social distancing measures and concerns over usage of cash and plastic," he added.
The report noted that India's push toward cashless payments accelerated in 2019, as card and mobile payments as a percentage of gross domestic product (GDP) rose to 20 per cent in the quarter ended December 31, 2019, from 13 per cent in the same quarter of 2018.
S&P Global Market Intelligence estimates that card and mobile payments represented only 21 per cent of USD 781 billion in retail purchases at brick-and-mortar stores in 2019.
"While a contraction in economic activity amid lockdowns due to the coronavirus outbreak will adversely impact cashless payments, mobile payments should be relatively resilient. Their uptake will accelerate due to concerns over usage of cash and plastic that interacts with potentially virus-infected surfaces," it said.
Popular mobile payments services in India are overlaid on Unified Payments Interface (UPI), a banking industry-sponsored protocol that lets people link their bank accounts with their phone numbers through payment apps.
The report said UPI processed nearly 11 billion transactions in 2019 and based on a monthly rate of USD 31 billion in February, UPI payments are already clocking more than USD 373 billion in annualised payment value in 2020.
It added that Google Pay and PhonePe-led UPI payment apps handled over 7 billion transactions in total, representing more than two-thirds of UPI transactions in 2019.
"Consumer apps provided by Google and Walmart-owned PhonePe have tightened their grip on UPI payments, but Alibaba-backed Paytm made greater progress in building a bank-like platform.
"Growing losses make Paytm and PhonePe dependent on investor support. Their publicly traded rivals, Google and Amazon, have deep pockets and can subsidise losses," the report said adding that the industry is "bracing for greater competition" with the entry of Facebook's WhatsApp Pay.
Overall, payment apps will have an opportunity to play a mainstream role in providing loans and insurance as banks are expected to reduce their exposure to unsecured lending amid the ongoing pandemic, it said.