Online transactions recorded a growth of 76% in the first quarter of 2021 as compared to 2020, as tier 2 and 3 cities and towns continued to contribute over 50% of all online transactions, says Razorpay’s new report – The Era of Rising Fintech. It also highlighted that the travel industry grew by 50% while real estate was up by 69% in the first three months of this year.
Vedanarayan Vedantham, Head of SME business Razorpay, said over 50% of this digital adoption is coming from tier 2 and 3 cities today, which indicates that this is not just an urban phenomenon. “Small businesses are providing newer payment methods and reaching out to a wider customer base that transcends geographical boundaries.”
Vedantham said the last 12 months have been like inside a time capsule. “India’s digital payments ecosystem in this timeframe has seen the kind of growth that might have planned over a three to five year horizon, if not the pandemic.”
Jammu and Kashmir made it to the top 10 “Digitally Inclusive States/Union Territories” for the first time, with a growth of 36% in online transactions in the January – March period, ranking above Uttar Pradesh, Madhya Pradesh and Haryana.
Payment options, such as Buy Now Pay Later (BNPL) saw a whopping growth of 569% in the last 12 months, owing to consumers avoiding bulk payments and preferring affordable payment modes. The report highlighted that UPI continues to be the preferred option followed by debit cards, credit cards and netbanking.
Customers, in the last few months, have increasingly been ordering online and F&B industry witnessed growth of 69% from January to March. Schools, colleges and online educational institutions have increasingly been accepting online payments for fees and salary payments; reflecting a 40% growth in online transactions in JFM21 vs. JFM20.
Vedantham highlighted that a lot of first-time digital users and previously traditional, brick and mortar businesses have come forward to embrace digital payments.
While the beginning of 2020 recorded just about 500 transactions in eNACH (electronic national automated clearing house) payments, a new payment service that allows anyone with a bank account to easily automate recurring payments. ENACH recorded a growth of 23,962% in JFM21 compared to JFM20, displaying a growing trend of businesses preferring digital and automated recurring payment processes.