The Indian e-Commerce market, which is currently at INR 400K Cr, is expected to reach INR 900K Cr by FY26, with customers from Tier-2 and smaller cities driving growth.
According to a report released by strategy consulting firm Redseer Strategy Consultants in collaboration with Plural by Pine labs, 85pc of businesses in India will be digitally enabled by FY26. The report further stated that the rise of first-time e-Commerce users during the COVID years accelerated the adoption of digital payments.
Commenting on the report, B Amrish Rau, CEO, Pine Labs, said, “From the foundational work on the JAM trinity to the development of India Stack, India has quietly orchestrated a revolution in online payments. These insights coming from the Redseer analysis especially on the BBPS and UPI adoption are a tell-tale sign of things to come. The future is increased tech-enabled digitization at the online and offline point of sale and at Pine Labs we are happy to be playing a part in it.”
Jasbir Juneja, Partner at Redseer, further adds, “Our research suggests that online shoppers in India are expected to grow by 50pc in the coming three years to reach >30 Cr by FY26, further paving the way for the reach of online payments in the country”.
As per the report, Indian households make ~35pc of transactions digitally, with Pay-to-Merchant payments (P2M) accounting for a significant proportion of transactions. Customers use digital payment methods in 80pc of grocery, food delivery, and travel transactions. With mobile phones facilitating seamless P2M payments, digital transactions by households are estimated to cross ~50pc by FY26.
As more customers have adopted digital payments, businesses have also responded by leveraging technologies to enable digital transactions. The report estimates that ~75pc of the ~7 Cr businesses in India are digitally enabled, and the number is expected to rise to 85pc by FY26. UPI captures the biggest share of the payments market, accounting for 84pc of the total digital payments volume as of FY23. BBPS, an ecosystem facilitating various bill payments, is set to witness a compound annual growth rate (CAGR) of approximately 30pc between 2023 and 2026.
Financial products and services such as embedded credit, embedded insurance, and embedded finance can increase business revenue, reduce the cost of customer acquisition, smoothen customer journeys, and provide a competitive edge.
The RBI conceptualized payment system, BBPS driven by National Payments Corporation of India (NPCI) also finds a mention in the Redseer report. As per the Redseer findings, BBPS is poised to witness a 30pc increase in transaction volumes and increase from 110 crore transactions in FY23 to 240 crores by FY26.
View the report here.
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