Impact of Covid-19 Outbreak on Digital Payments Market
The Digital Payments Market is expected to boom in sectors such as online gaming, OTT (over-the-top) media such as Netflix, YouTube, and Amazon Prime, online grocery purchase or food delivery apps such as Instacart, Amazon, Doordash; and video streaming and meeting apps such as Huawei Cloud WeLink, Skype, and ZOOM Cloud Meetings in the first half of 2020, while sectors such as airlines, travel & hospitality (tourism), malls/retail, theaters, and restaurants are facing a negative impact due to the COVID-19 pandemic.
As per the recommendations of the World Health Organization (WHO), the government of India has urged its citizens to use non-cash and contactless modes of payment (such as NEFT, IMPS, UPI, and BBPS), and has ensured the facilitation of fund transfers, purchase of goods/services, and payment of bills. In India, COVID-19 has led to an increase in online/digital payment transactions. Many retailers, as well as stand-alone shops, have been forced to shut their brick and mortar stores and sell exclusively through online channels.
As per MRFR analysis, the sales in China decreased by more than 40% during the lockdown (1st quarter of 2020). A comparable impact is expected in India, as the digital payments sector is estimated to have registered a decline of around 30% in transaction value in March. The in-person digital transactions have been directly hit as public places such as malls/theatres, transportation, hospitality, air travel, retail, and enterprises have been completely shut since March 23rd, 2020. The total payment volumes have shrunk due to the reduction in consumption and trade.
Almost one-third of the digital payments in the country are from OTA (online travel aggregators), movie theatres, event booking portals, and shopping. With these sectors closed, the digital payments market is expected to dip in the first half of 2020. Thus, the digital payment vendors in the country are expected to be directly affected by reduced sales. One of the leading online payment solutions providers—Razorpay and payment gateway platform—CCAvenue stated that the number of transactions in the travel segment has reduced by nearly 40%. Meanwhile, offline aggregators and service providers, have stated that closed shops in metro cities have led to a decrease in the daily volumes of payment transactions. Also, the digital remittance market is expected to decline in the year 2020, as most of the migrant workers and small and medium enterprises are shut due to the lockdown. Hence, the digital payments market is expected to be affected negatively.
Source: MRFR Analysis