Trends In Digital Payments Space In 2020 & Outlook For 2021 Covers A Broader Perspective
Sir, it will be helpful if you can pay us the exact amount. Unfortunately, we are out of change for Rs 500.
This was a common conversation when we went out shopping a decade ago. A lot seems to have changed now. Thanks to advances in mobile technology that led the Fintech (financial technology) industry to grow rapidly in the last couple of years. Now, using rare features like mobile banking and online transactions has become common.
Typically, in 2020, we did witness a few more remarkable shifts in the payments space. There has been a massive digital adoption since the pandemic outbreak. The increasing use of technology to work, play, shop, and stay connected have shaped new digital habits during the lockdown phases.
For the payments industry too, COVID-19 and its consequences have accelerated a series of existing trends in both consumer and business behaviors. Ongoing shifts toward e-commerce, digital payments (including contactless), instant payments, and cash displacement have all been significantly boosted in the past few months. Digitization stepped in to bridge the gaps left by lockdowns and social distancing measures.
In this regard, let's take a closer look at what happened in the digital payments space in 2020 and how new trends will transform the fintech sector in the years to come.
Rise of Digital Payments & UPI in India
For the first time this year, the number of Unified Payments Interface (UPI)-based payments crossed the 200 crore mark in monthly transactions. This expeditious growth has been possible due to increased smartphone penetration and cheaper internet. India is among the top nations with the world's fifth-biggest online customer base. Plus, a majority of them are only using mobile internet which indeed is a driving force for the success story of digital payments. The rise of new-age technologies such as e-wallets, UPI, tap, and pay, have allowed people to look beyond the conventional mode of payments. Players in this space are constantly offering cash backs and rewards to further enhance the customer experience.
The concept of neo banking is appealing the tech-savvy consumers who don't mind doing most of their money management through a mobile app
Moreover, most consumers - even those who had historically been reluctant to do - are now turning to online payment. As a result, businesses are realizing that physical-digital integration is important now more than ever before and therefore are already leading a change on this front.
Growing Online Education
Due to COVID-19 schools, colleges, and other educational institutions were shut all across the world. As a result, traditional education changed drastically, with a significant rise of e-learning and edtech platforms. Now it is also interesting to know that there was already tremendous growth and adoption in education technology. The global edtech investments reached $18.66 billion in 2019 and the overall market for online education is projected to reach a valuation of $350 billion by 2025. Certainly, the pandemic added impetus to this growth story.
E-learning platforms stepped up to provide education facilities during the COVID-19-induced lockdown. As per Google trends, searches for edtech platforms grew including searches for individual companies like BYJU'S, Unacademy, Toppr, and so on. While online education gained momentum and continues to do so, parents have been also been paying for digital education.
Neo Banking Services
Over the years, fintech startups have been bringing a new approach to the banking experience for consumers. The concept of neo banking is appealing the tech-savvy consumers who don't mind doing most of their money management through a mobile app. Several fintech apps are providing to be a one-stop banking solution that allows users to link their bank accounts in one place and help them track their transactions, receive timely bill payment notifications, among several other facilities. Thus, fintech players are at the forefront of digitizing the entire suite of financial services banking, insurance, lending, and so forth.
Smart Payment Option for Teenagers
Lastly, kids-focused fintech is fairly a new concept in India and a space mostly unexplored. As we know, most teenagers belong to a tech-savvy generation, but there is hardly any platform dedicated to teenagers to make online payments. At present, most kids and teenagers borrow their parents' debit or credit in order to make online payments when they need to pay for a course or purchase games. Therefore, developing digital payment solutions for them is becoming imperative. To fill this need-gap, one such player in this fintech segment playing a game-changing role is Junio. It is a kid-focused digital smart card lets children make digital and physical purchases. While Junio provides digital payment solutions for kids between classes 4th and 10th, it also helps in nurturing financial literacy and discipline in kids at an early age.
In conclusion, the cashless economy may still be a distant dream right now. But we are definitely in that direction as fintech coupled with technology is already playing a significant role.