Digital payments slip 30% on Covid-19 curbs

BENGALURU | MUMBAI: Shut shops, cancelled airline tickets and slower discretionary spends by consumers on dining out and movies are starting to hurt the country’s fast-growing digital payments sector. 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, 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 are still high, the value of transactions has significantly declined, leading 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.

Online payment solutions provider Razorpay and payment gateway platform CCAvenue said transactions processed in the travel segment – which accounts for over 25% of all online spends – have reduced by nearly 35% to 40%. Meanwhile, offline aggregators and service providers, such as Pine Labs and merchant acquirer BharatPe, said that shuttered shops in India’s leading metros will drag down daily volumes.

BharatPe, a QR-code based payments startup, said transactions on the platform have reduced by nearly 10%-15%. “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, CEO of BharatPe, told ET.

Meanwhile, online transactions or payments which are digitally checked out, have come under scanner due to travel restrictions and slump in miscellaneous spends. “Aviation, which contributes nearly one-fourth of all online digital transactions, has seen a fall of nearly 40% due to cancellations and refunds because of restrictions on international travel,” said Harshil Mathur, CEO, Razorpay. “At the same time, we have seen increased online spending in segments such as utility, groceries and food delivery services,” he said.

March to May traditionally attract the highest travel-related spending by Indian consumers. This could change this year if the situation persists, executives added. “March and April see customer demand for travel. This (virus) posts a cloud on future transactions through the sector which brings nearly 30% of the payments for the online payments industry,” said Vishwas Patel, CEO, CCAvenues.

Demand for new tickets has slumped 35%, Patel added.

A Paytm spokesperson said, “We have been witnessing 20% growth in digital payments as compared to the regular days… There has been a massive surge in repeat transactions for various use-cases like fuel stations, utility payments among others. Offline payments have grown by 12% owing to more people preferring Paytm over cash.”

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