The Indian payments ecosystem is expected to undergo a massive change in terms of usage, adaptability, and growth, with the country anticipated to be a world leader in the shift to complete digital payments. Transactions by digital methods are expected to cross 4 lakh crore by 2026, and 85% of the Indian business ecosystem will witness the biggest digital transformation by 2026-27.
Government Initiatives and Market Growth
Adoption of digital payments by Indian households is expected to cross 50% by 2026, thanks to the government’s vital role in the payment method transition process, including demonetization in 2016. The internet users in India will increase more than 95% by 2026, and the e-commerce market is expected to expand to Rs 900,000 crore by FY26, with smaller cities driving more than 75% of all e-commerce transactions.
Fintech Sector and E-Wallet Market
The fintech sector is said to be the core of digital payments and has bagged funding worth Rs 95,000 crore. The E-Wallet Market is projected to reach USD 489.3 billion by 2030, with a CAGR of 23.40% between 2022 and 2030. E-wallets are digital payment systems that store financial information and enable users to make secure and easy online transactions, with multiple uses and applications in the current digital economy.
Benefits and Challenges of Digital Wallets
Digital wallets offer benefits such as the ability to tap a smartphone to purchase goods and services, store multiple debit and credit cards, and house loyalty program information. However, one of the significant challenges facing the e-wallet market is the lack of
universal adoption, with different regions and countries having their preferred payment systems. The pandemic contributed to the disruption of payments and the rise of contactless payments, with EMV, COVID-19, and Millennials all playing a part in the surge of digital wallets.
Global Trends and Security Concerns
Consumers are concerned about the security of their personal and financial information, but digital wallets deliver on the security angle. China is researching and piloting palm-based payment systems, while Musk is trying to turn Twitter into a payments-based super app. Whatsapp rolled out an in-chat payment tool in Singapore and Brazil after a lackluster response in India, raising concerns about privacy, data protection, and the risk of scams and fraud. The convenience of in-chat wallets could shake up the digital payment scene, but security concerns remain a hurdle.