The onset of lockdown towards the end of March created a massive ruckus in our lives. While we stay indoors, working from home, keeping a safe distance from the outside world as much as possible, the pandemic still continues to have an effect on all of us. Things that we had never even imagined have become the new normal.
In our last report, we talked extensively about how COVID-19 injured businesses across industries, including digital payments.
To move on from there, in this 6th edition of The Era of Rising Fintech Report, we are bringing you an overall landscape of digital payments across several industry verticals, in the last 101 days of lockdown.
All findings in this report are based on transactions made on the Razorpay platform from March 24th to July 2nd, 2020.
What we thought would be a few weeks of lockdown, quickly turned into months. This brought about many changes to digital payments.
101 days of lockdown (March 24 – July 2)
- Social distancing also led to a surge in the need for companionship and online counselling platforms. The social engagement industry (personal counselling, dating, and matrimony platforms) witnessed a growth of 32%
- From March 24th to July 2nd, we observed the demand for online courses sweeping upwards. The ed-tech industry mounted up by 23% during this time
- Since people were confined to their homes, more and more online consultations were carried out for health concerns. Online medical services and purchases grew by 20%
- There was also a huge spike in the number of people paying their bills online. This resulted in the utilities industry expanding by 163%
The lockdown in numbers
We also sifted through the digital payments made during the first 30 days (March 24th to April 23rd) and the last 30 days of the lockdown. These are a few insights worthy of mention.
Last 30 days of lockdown (June 3rd to July 2nd)
- During the initial stages of the lockdown, digital payments took a fall by 30% since many businesses were impacted by the pandemic. But, towards the last 30 days, digital payments made a comeback by 23%
- Another noteworthy observation was that logistics, real estate, and healthcare industries took the road to recovery. The industries boosted by 687%, 496%, and 166% respectively
- Towards the last 30 days, P2P lending and utilities took a downward plunge by 41% and 13%, compared to the first 30 days of the lockdown
- We also observed a massive shift in consumer behaviour. While UPI and cards were the most preferred payment modes, we saw a spike in modes like PayLater (290%), EMI (125%), and cardless EMI (178%)
First 30 days of lockdown (March 24th to April 23rd)
- We observed an increase in the number of digital payments made towards NGOs by 180%, as many people came together to fight COVID-19
- Utilities, IT & software, and media & entertainment grew by 73%, 32%, and 25% respectively
- Wallet adoption in tier 2 cities saw growth as more and more people turned to Amazon Pay, Jio Money, and Paytm for transactions
- The increase in wallet use can also be attributed to the PM Cares fund, and rewards & cashback offers
What’s happening in the fintech industry?
- The pandemic imposed digital payments upon everyone. As more and more people adopt digital payments, with time, we can expect new-age contactless mobile-based payments to take over
- Freelancers are on the rise. We witnessed a growth of 20-25% from freelancers and micro-entrepreneurs as their demand for digital payments increased in last three months
- The adoption of digital banking has become urgent and pertinent, now more than ever. Neobanking platforms are facilitating businesses to shift from traditional business banking to neobanking, with their customer-driven, data-centric approach
- We also foresee tier 2 and 3 cities continuing to trust and adopt digital payment modes, beyond bill payments
- Banks and fintech companies are to engage in deeper collaborations to create custom-solutions for SMEs
Digital payments and banking beyond 2020
Over the years, we have spent hours and hours analysing numbers to draw insights, patterns, and trends. Although the pandemic broke a consistent pattern, with data and more research, here is what we can expect beyond 2020.
- The pandemic may lead to a dip in the global GDP, approximately by 6%. This will be a first after the great depression
- While COVID-19 may reduce the number of funding rounds and alter market conditions, businesses are expected to turn to neobanks, especially ones offering lending and other services for SMEs
But there’s hope: The digital payments sector is expected to go beyond USD 1 trillion by 2023 and Blockchain-based B2B payments are to cross $4.4 trillion by 2024.