Coronavirus has come as a jolt to many sectors including India’s burgeoning digital payments industry. With supermarkets getting shut and more and more people staying indoors to maintain social distancing, fewer purchases are being seen on a daily basis. Leading firms are also processing fewer online and offline digital transactions with air travel, hospitality, and retail being the three most-impacted sectors.
With industries across the board seeing a sharp slowdown, the digital payments sector is estimated to have registered a decline of around 30% in transaction value over the past few weeks, as industry executives told ET.
Digital transactions processed by leading firms, both online and offline, are bearing the brunt due to restrictions in place to prevent a Covid-19 outbreak. It has especially impacted the air travel, hospitality, and retail sectors.
“The hit is larger in metros for now, not India-wide,” said a top executive at a payments firm.
While customer traffic on digital channels is still high, the value of transactions has significantly declined, leading to payment companies told ET.
“Considering the current situation in India, there is no denying the fact that the daily routine of the consumers has been impacted,” said Kush Mehra, chief business officer of Pine Labs, a Point-of-Sale (PoS) terminals player. “As Indian consumers start to limit their physical footprint in stores, it is too early to assess the actual impact on the offline transactions across all merchant categories,” he added.
For online payment solutions provider Razorpay and payment gateway platform CCAvenue the transactions processed in the travel segment, accounting for more than 25% of all transactions, have reduced by nearly 35% to 40%. Offline aggregators and service providers, such as Pine Labs and merchant acquirer BharatPe also told ET that shuttered shops in metros will drag down daily volumes.
“To the extent that markets are getting shut, stores are not opening, and our merchants are not able to do businesses especially in metros like Mumbai. We have seen a nearly 10% contraction in digital transactions processed over the last few weeks,” Ashneer Grover, co-founder, and CEO of BharatPe said. Transactions on the platform have reduced by nearly 10%-15%.
Airline bookings reportedly contribute to 30% of all digital spending in value terms. With massive cancellations and refunds, the sector has been the primary reason for the slowdown in the digital payments sector.
“The aviation sector, which contributes nearly one-fourth of all online digital transactions, has seen a fall of nearly 40% due to cancellations and refunds due to restrictions on international travel,” Harshil Mathur, founder, and CEO, Razorpay was quoted as saying.