Almost 66 percent of PhonePe’s active users are from Tier III cities while Maharashtra, Telangana and Karnataka contribute to 40 percent of total digital transactions. While people from Kerala are the largest purchasers of gold, they have not yet switched to buying gold online. These are just some of the granular insights from PhonePe’s report on digital payments on its platform.
Digital payments in India have ballooned in the past few years and the pandemic has accelerated adoption further. The United Payments Interface (UPI) saw monthly transaction values rise from Rs 2.06 lakh crore in March 2020 to cross the Rs 6 lakh crore mark in just 17 months by July 2021.
PhonePe dominates UPI transactions with a 46 percent market share. This has given fintech the confidence to share data, insights, and trends on digital payments in the country through a quarterly report. The company says that with its market share, this data is representative of India’s digital payment habits.
STATE-WISE PENETRATION AND TRANSACTIONS
The report says that of the 60 crore smartphone users in India, PhonePe has over 30 crore. As per its user base, Telangana has the highest user penetration at 42 percent followed by Goa and Haryana at 36 and 35 percent respectively. Meghalaya has the lowest penetration at six percent, followed by Union Territories (UTs) Dadra and Nagar Haveli and Daman and Diu, and Lakshadweep, at eight percent.
Karnataka, Maharashtra, Telangana, Andhra Pradesh and Rajasthan are the top five states in terms of their share of digital transactions.
In the one year from March 2020 to March 2021, PhonePe saw a 50 percent growth in customers and a 159 percent growth in transactions across the country. 30 states and UTs saw a growth of over 100 percent in transactions during the same period.
Andaman & Nicobar followed by Jammu & Kashmir were the two regions with the highest transaction growth rate at 408 percent and 365 percent respectively, and Meghalaya and Lakshadweep saw the lowest growth.
TIER-WISE TRANSACTIONS
While the share of merchant payments is the highest in Tier I cities, Tier III cities see the most peer-to-peer payments (P2P). According to PhonePe, of total payments in Tier I cities, 52 percent are merchant transactions, 36 percent P2P and only 11 percent are recharge and bill payment transactions. Tier II cities see 41 percent of P2P and 45 percent of merchant transactions.
P2P transactions dominate almost half of Tier III transactions at 49 percent and merchants only make up 32 percent of the total.
TRANSACTIONS SPIKE UNDER THE PANDEMIC
From March 2020 to March 2021, PhonePe witnessed a 157 percent rise in P2P transactions from 21.2 crore to 54.6 crore. Merchant transactions crossed P2P transactions in the year of the pandemic growing by a significant 253 percent from 16.2 crore in March 2020 to 57.2 crore in March 2021.
Recharge and bill payment transactions went from 13.1 crore in March 2020 to 19.6 crore in March 2021, a rise of almost 50 percent.
GOLD SHINES ONLINE
The report says that while Kerala is the state that buys the largest overall volume of gold, it has not yet taken to buying it online. Maharashtra, West Bengal, Uttar Pradesh, Andhra Pradesh and Telangana are the top states with anywhere between 11 to 8 percent of the population of these states buying gold on PhonePe.
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