How are online payment methods impacting the Indian economy?

How are online payment methods impacting the Indian economy?: The use of online payment methods in India is on the rise and is expected to grow even more. A recent report suggests that by 2026, digital payments in the country will reach $10 trillion in value. Fueled by improved digital infrastructure, cheap internet, and user-friendly interfaces, this growth has also boosted the Indian gaming sector. 

As more and more Indian players sign up with online casinos that offer games such as rummy, poker, and teen Patti, digital payment providers become key players in the growth of the real money gaming segment. UPI, Skrill, and PayPal casinos offer ease of online payments for Indian gamers. This is evident considering the 26% increase in revenue enjoyed by transaction-based games like rummy and poker according to the AIGF-EY report.

Digital Payments and their impact on the economy

Moving to a cashless economy seems to have a positive impact on the Indian economy. BCG research shows that economies that move to digital payments can witness a boost in the GDP by up to 3 percentage points. India has outpaced the world in digital payment transactions and ranks first globally. 

The volume of digital payments in India during the Financial Year 2021-2022 grew by 33% as a total of 74.22 billion transactions was recorded. 

The rise in digital transactions results in reduced fraud and growing online businesses with satisfied customers. The overhead costs are reduced for businesses that employ online payment methods. Such businesses are also bound to attract more customers. 

Digital payment apps such as Paytm, Paypal, and PhonePe all have the feature of online shopping on their platform which enables customers to directly connect with businesses from their payments app.

When you make a UPI payment using Paytm for instance, the payments app offers coupon codes and discount offers for shopping with its partners that including eCommerce businesses. Not only do customers get offers for shopping but these payment apps also offer bonuses and other promotions for online gaming.

In a way, the rising infrastructure has connected digital payments, e-commerce, and online gaming such that development in one sector brings about the growth of the others. A clear indicator of this is the rise in consumer to merchant digital payments.

CLSA estimates that these digital payments (consumer to merchant) have increased from 5% in FY 2016 to more than 15% in FY 2021 and are expected to grow beyond 20% in FY 2022.

Projections for the gaming industry

While the Indian gaming market is expected to reach $7 billion in 2026, a key point to consider is the fastest-growing segment of the market – in-app purchases.

According to an India Gaming Report 2021 by Lumikai and Redseer, in-app purchases are expected to grow at 30-40% in the next 5 years. The largest source of revenue in the gaming market is the real money gaming segment. 

A highly effective and secure digital payments infrastructure is at the root of the success of real money games. In addition to digital payments, the technological advances in the mobile gaming industry are also the driving forces behind the unprecedented growth in new users.

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