Online transactions grew 80 percent in 2020 over the previous years, driven by strong adoption of digital transactions in tier II and III cities, according to a report by fintech firm Razorpay. The report pointed out that UPI transactions outgrew cards, net banking, and wallets with 120 percent growth in 2020 and became the most preferred mode of payment, especially for tier II and III cities.
Razorpay, which facilitates digital transactions, witnessed a decline of 30 percent in digital payments initially during the lockdown. Still, after the first 70 days of the national lockdown, digital payments rebounded by 23 percent.
“In comparison with 2019, online transactions grew by 80 percent in 2020, suggesting a magnificent adoption of digital payments by consumers and businesses alike. A major contribution to the growth of digital payments in 2020 came from the last six months when businesses across a few sectors slowly started to show signs of recovery,” it added.
Digital payments saw a 73 percent growth between July and December compared to the first six months of 2020. Also, tier II and III cities contributed to 54 percent of digital transactions in 2020, demonstrating a 92 percent growth in one year, the report said.
It noted that states like Chandigarh, Punjab, Arunachal Pradesh, Assam, and Kerala saw a growth of 205 percent, 187 percent, 127 percent, 124 percent, and 117 percent, respectively, along with a positive growth from other states as well.
Digital payments for utilities/bill payments grew 357 percent in 2020, while payments for mutual funds rose by 382 percent. Education, e-commerce, and healthcare sectors also witnessed a significant growth of 167 percent, 189 percent, and 148 percent, respectively.
“Every sector, except for Travel & Housing and Real Estate, has started to grow back to pre-lockdown levels slowly; these were the only two sectors that showed a negative growth during the last six months of 2020 when the situation started to ease out in parts,” the report said.
From consistently being the second most preferred payment method in 2019, UPI became the most preferred one in 2020, overtaking cards, net banking, and wallets by showing a steep 120 percent growth. Wallets regained attention in 2020 due to increased offers, cashback, and an increase in the market number.
“In a year of unprecedented changes and challenges, 2020 also posed some interesting opportunities for businesses to embrace digital payments. Many moved their business online for the first time, ushering in a new digital transformation,” Razorpay co-founder and CEO Harshil Mathur said.
He added that contrary to how unprecedented the circumstances have been, 2020 was a year of “great innovation, new opportunities and the win of a much-awaited trust in digital payments.”
“Businesses are beginning to stabilize, and some of them are even back to the pre-COVID levels. With the ever-evolving demands from businesses and consumers, we have a long way to go, but this, to me, is a great start,” Mathur said.
In the last six months of 2020, Razorpay witnessed a 40-45 percent month-on-month growth. The company powers payments for over 5 million businesses, including Facebook, Airtel, BookMyShow, Ola, Zomato, Swiggy, Cred, and ICICI Prudential.
