Digital payment transactions have gone up by 76% in January-February-March(JFM) of 2021, as compared to JFM, 2020, says a new report by Razorpay.
Due to the current pandemic, small businesses across every sector took a severe hit in 2020. But now a year later, embracing ecommerce and online payment methods have played a major role in keeping small businesses afloat.
Full-stack financial solutions Razorpay in its eighth edition of ‘The Era of Rising Fintech’ report provides a detailed view of the evolving FinTech ecosystem, the digital spending patterns of consumers and an analysis of how digital payments performed in the last 12 months of the pandemic.
The report also delves into a comparative analysis of how different sectors and payment modes performed in 2021, as compared to 2020, when businesses and life were hit by Covid.
The report’s findings are based on transactions held on Razorpay platform between 2020 and 2021. (JFM: Jan-Feb-Mar, OND: Oct- Nov-Dec).
Razorpay Head of SME business Vedanarayan Vedantham said, “The last 12 months have been like being inside a time capsule. India’s digital payments ecosystem in this timeframe has seen the kind of growth that might have happened over a 3-5 year horizon if not for the pandemic.”
“A lot of first-time digital users and previously traditional, brick & mortar businesses have come forward to embrace digital payments. Over 50% of this digital adoption is coming from Tier 2 & 3 cities today, which indicates that this is not just an urban phenomenon,” he added.
Small Businesses are providing newer payment methods and reaching out to a wider customer base that transcends geographical boundaries.
Some key highlights:
- Online transactions in JFM’21 saw a growth of 76% compared to JFM’20 indicating a large scale digital adoption by both businesses and consumers
- In JFM’21, Tier-2 & 3 cities and towns continued to contribute over 50% of all online transactions
- As tourism opened up, Jammu & Kashmir found itself in the top 10 Digitally Inclusive States/Union Territories for the first time, with a growth of 36% in online transactions in JFM’21 compared to JFM’20, 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 twelve months, owing to consumers avoiding bulk payments and preferring affordable payment modes
- UPI continues to be the preferred payment option followed by debit Cards, Credit Cards and Net Banking
- While the beginning of 2020 recorded just about 500 transactions in eNACH payments, a new payment service that allows anyone with a bank account to easily automate recurring payments; eNACH saw a growth of 23,962% in JFM’21 compared to JFM’20, displaying a growing trend of businesses preferring digital & automated recurring payment processes
Small Businesses are expected to increase investment in digital technologies in 2021. Affordable payment options such as Buy Now Pay Later (BNPL) have seen an increased preference which is expected to rise and increase transactions for SMBs, the report added.