Mobile wallet payments are becoming the ‘mainstream’ payment method in India and gradually displacing traditional payments such as cash and cards. The COVID-19 pandemic has accelerated the growth further. Against the backdrop, mobile wallet payments are expected to grow at a compound annual growth rate (CAGR) of 42.7% between 2021 and 2025 and reach INR305.6 trillion ($4.1 trillion) in 2025, forecasts GlobalData, a leading data and analytics company.

Mobile payments data in India includes transactions made using Unified Payments Interface (UPI) and preloaded and card-linked mobile wallets.

According to GlobalData’s Payment Instrument Analytics, mobile wallet payments by value is expected to grow by 69.8% in 2022 to reach INR125.1 trillion ($1.7 trillion).

Sowmya Kulkarni, Senior Payments Analyst at GlobalData, comments: “The availability of high-speed internet facility at low cost, coupled with the rise in smartphone penetration has provided the foundation for mobile payments to thrive in India. This is also supported by progressive government reforms, growing financial literacy, rise in tech savvy consumers and proliferation of mobile payment solutions.”

As a part of government’s ‘Digital India’ program, the government has been taking several initiatives to boost digital payments in the country and reduce the use of cash. The government has mandated all mobile wallets and QR-codes to be interoperable, effective from 1 April 2022, to enable convenient mobile-based payments across any merchants.

The government also introduced Payments Infrastructure Development Fund (PIDF), in January 2021 to offer subsidies to merchants for setting up infrastructure for acceptance of card and QR based payment. As of November 2021, 5.5 million digital devices were deployed at merchant outlets for QR code-based payment acceptance with the support from this fund.

Kulkarni adds: “Mobile wallets have now become an integral part of Indian consumers payments and are also preferred by merchants of all sizes, from big supermarkets to neighbourhood ‘kirana’ shops. This growth has been largely driven by state-backed instant payment system UPI, which enables users to make payments directly from their bank accounts using recipients’ mobile number or scanning QR code.”

The significant growth in mobile wallet transactions has seen the proliferation of mobile wallet brands, with each competing to get a pie of this market. Some of the popular brands are PhonePe, Google Pay, and Paytm.

Kulkarni concludes: “Mobile wallets market in India is in high growth phase. Government’s push and improving mobile payment acceptance infrastructure will further drive the mobile wallets usage, thereby helping the government’s broader objectives to become a less cash economy.”