Digital payments market size in the country is expected to grow and touch $500 billion (Rs. 33 lakh cr approx.) by 2020, which will account about 15 per cent of gross domestic product (GDP).
This has been revealed by the study put together by search engine giant Google and Boston Consulting Group (BCG), a business consulting firm. The 'Digital Payments 2020' report, projects that non-cash contribution in the consumer payments segment will double to 40 per cent.
"The smartphone explosion will usher in a new era in Digital payments in India over the next few years that will see digital payments exceed USD 500 billion by 2020 and non-cash transactions exceed cash transactions by 2023," said Alpesh Shah, Senior Partner and MD, Boston Consulting Group.
He also said contribution of digital payments would be 15 per cent to the country's GDP.
The report notes that 81 per cent of existing digital payment users prefer it to any other non-cash payment methods.
"It is telling that half of India's Internet users will use digital payments and that the top 100 million users will drive 70 per cent of the gross merchandise value," Rajan Anandan, VP South East Asia and India, Google, said.
Online shopping, payment of utility bills and buying movie tickets have emerged as the top three user activities.
The report also said 90 per cent of Indian consumers are likely to use digital payments for both online and offline points of sale such as unorganised retail, eateries and transport.
Micro-transactions will form a substantial portion of the industry with over 50 per cent of person-to-merchant transactions expected to be under Rs 100, the report added.
The value of remittances and money transfer that will pass through alternative digital payment instruments will double to 30 per cent by 2020, it said.
(With PTI Inputs)