50% of India's net users to make online payments by 2020: report

A dominant contributor to the changing landscape is smartphone penetration and a progressive regulatory policy, industry experts said.The size of the digital payments industry currently is pegged at USD 32.5 billion.

"The digital payments industry is at an inflection point. About 50 percent of India's Internet users will use digital payments and that the top 100 million users will drive 70 percent of the GMV (Gross Merchandise Value)," Rajan Anandan, Vice-president, India and Southeast Asia, Google, said.Regulatory clearances and systems initiated by the government like implementing the Unified Payments Interface will be a key factor to growth, Anandan said.

Ecommerce and online transactions will be part of digital payments. However, it will be offline transactions especially small-ticket ones at retailers and similar establishments, that will trigger the digital payments growth, he said.Offline stores, which currently don't use a digital wallet for payments, will in future come online and drive such transactions.

"India will leapfrog from traditional payments to digital payments to have the most advanced digital payments ecosystem by 2020," he said.

Elaborating on Anandan's views, Alpesh Shah, Senior Partner and Managing Director, BCG, India, said: "Global digital payments is set to grow four times in value by 2020. Indian is on an even (bigger) exponential growth trajectory."

"The smartphone explosion will usher in a new era... that will see digital payments exceed USD 500 billion by 2020," he said in a statement.

Non-cash transactions will exceed cash transactions by 2023, he added. Non-cash transactions include payments made through cheques, demand drafts, netbanking, credit and debit cards, mobile wallets and Unified Payments Interface.

The Google-BCG report predicts that the value of remittances and money transfer that will pass through alternate digital payment instruments will double to 30 percent by 2020.