$271 bn consumer spending to shift from cash to cards
New Delhi: About 66.6 billion transactions worth $270.7 billion are expected to shift from cash to cards and digital payments by 2023 in India, and further increase to $856.6 billion by 2030, a report by Accenture said on Tuesday.
This rapid shift to digital payments due to the Covid-19 pandemic is urgently increasing the need for banks to modernise their payment systems, the report, titled 'Playing the Long Game in Payments Modernisation', said.
The report is based on a survey of 120 payments executives at banks globally regarding the transformation of their payments business, as banks make multi-year investments to compete with non-bank digital-payments providers and comply with new regulations. Conducted between July and August this year, the report surveyed markets including Australia, Brazil, Canada, China, India, Norway, Singapore, Thailand, the UK and the US.
It noted that the expected drop in cash volume is based on GlobalData and Accenture Research assumptions. Also, the forecast of non-cash transactions in consumer spending is calculated using cash evolution data and MSC rates provided by GlobalData. The report forecasted that nearly 420 billion transactions worth $7 trillion, globally are expected to shift from cash to cards and digital payments by 2023 - and increase to $48 trillion by 2030.
"In India, 66.6 billion transactions worth $270.7 billion are expected to shift from cash to cards and digital payments by 2023 – and increase to $856.6 billion by 2030," it said.
The rapid move to digital payments has put additional pressure on banks, with three-quarters (75 per cent) of surveyed bank executives saying that the pandemic has increased the urgency of their plans to modernise payment systems, the report added.
"Covid-19 has accelerated the shift to digital payments at a pace banks could not have predicted. The pandemic will permanently change how consumers shop and pay for products as they prioritise convenience above all else," Sulabh Agarwal, who leads Accenture's Payments practice globally, said. He added that while banks' investments in new payments systems have focused primarily on meeting compliance deadlines, the way they will drive value moving forward is by embracing the changing consumer dynamic and improving the customer experience.