Digital payment transactions fall by 30% in India for the first time since demonetization because of coronavirus lockdown

• Digital payment transactions dipped by 30% in India, says a report by payments company Razorpay.
• However, interestingly ‘online donations’ went up by 180%.
• Razorpay founder Harshil Mathur believes that this is an opportunity for fintech companies to turn things around.

It looks like Indians are tightening their purse strings and loosening it for essentials only. As per a report by Razorpay, digital payment transactions fell by 30% in India in the last 30 days of lockdown.

This is an aberration for fintech companies whose transaction numbers have only been rising since demonetisation in 2016.

“In the first two weeks of March before lockdown, the overall online spending increased by about 10% but later saw a dip primarily owing to precautionary measures which people started to take by staying indoors,” said Harshil Mathur, CEO and co-founder, Razorpay.

According to the company’s report, transactions in logistics dropped by 96% due to gaps in supply chain, travel sector declined by 87%, real estate by 83%, food and beverage (F&B) by 68%, and grocery by 54%.



However, interestingly ‘online donations’ went up by a whopping 180%. After the pandemic, several organizations called for donations to help out the needy and it looks like many answered the call.

Since the country is closed for everything except essentials, several fintech companies with payment products have seen a drop in transactions. In some cases, by almost half. “During the lockdown, Paytm saw a drop by 47%, Google Pay by 43% and PhonePe by 32%,” says the report.

However, Paytm dismissed the same. "We would like to ascertain that Paytm Payments Gateway is India's leading payment processing platform with over 50% market share. For our merchant partners, we are directly processing transactions that can not be captured by any other payment gateway provider with regards to Paytm's UPI growth, contribution, and market share. Therefore, transactions done on Razorpay cannot be put forward as the industry's trend to determine Paytm's contribution to UPI. Their representation on Paytm's growth is misleading," said a Paytm spokesperson.

But Mathur believes that this is the time fintechs saw an opportunity to turn things around. “I believe this is a huge opportunity for fintech companies, some of them may have to re-examine their business models after Covid-19, prioritising growth and customer acquisition over profitability. The fintech industry will be forced to evolve, think big and act boldly which will eventually result in innovations in payments and banking solutions to be able to meet new customer demands and behaviour,” he said.

Mathur believes that in a post Covid-19 world, there will be a greater collaboration between banks and fintech companies as new digital tools will be integral to any bank’s strategy. “The new macroeconomic narrative will soon transform into the next normal,” he said.

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