Online Payment In India Accounted For 14% Of Total Transaction Amount In FY 2015 [REPORT]

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During the dawn of eCommerce industry in India, people were not comfortable using their credit/debit card data online for payments and were often shying away from purchasing online. However, with better security measures and multiple online payment channels today, cashless transactions have seen an ultimate leap surpassing the paper-based transactions in India in FY 2015.

As reported by The Economic Times, paper-based transactions cleared through cheques in FY 2015 (April 2014 – March 2015)  summed up to INR 85 lakh crore (US$1.33 Trillion) whereas cashless transactions through credit card, debit card, NEFT, and online wallets comprised of INR 92 lakh crore (US$1.43 Trillion). The total transaction amount in India – exclusive of cash transactions – reached $2.76 Trillion in FY15.

The main reason behind this spike in cashless transactions is the growth of eCommerce industry in India, which allowed consumers to purchase products at discounted rates at the realm of their homes. Also, the new generation is shifting towards hi-tech gadgets and technology to make funds transfer as it’s easier, hassle-free and instant transaction compared to paying by cash or cheque. With online funds transfer or virtual payment system, people can send or receive payments instantly at the touch of a button rather than visiting banks to withdraw or deposit money.

Distribution of Cashless Transactions in FY 2015:

The majority of cashless payments comes from retail electronic clearing which contributes more than 71% of the overall cashless transactions in FY 2015 whereas prepaid instruments contribute only Rs. 21,342 crore (US$3.3 billion) which is not even 1% of the total cashless payments. Payments by cards was also favored by many in FY 2015 which contributed more than 27% of the overall cashless transactions.

Deputy Managing Director (corporate strategy and new businesses) at State Bank of India, Sunil Srivastava informed that,

“At SBI, about 69% of daily transactions happen through alternative channels, including internet, ATM and mobile banking. We see it rising every year with more young people becoming our customers.”, says Sunil Srivastava, Deputy Managing Director (corporate strategy and new businesses) – State Bank of India.

On the other hand, mobile banking is slowly picking up among the consumers with the rise in number of Smartphone users in India. In FY 2015, cashless transactions through mobile banking amounted to Rs. 1 lakh crore which is not that great but still it’s the fastest growing payment option. These low numbers are quite expected as only 1 million customers are transacting using mobile wallets. However, the numbers will improve as it is expected to reach 100 million customers using mobile wallet in the country during the span of next 5 years as Smartphone users in India will grow with time using better connectivity options.

Major Contributors of Cashless Payments:

People in India have realized the benefits of opting for cashless payments as it is easy, secure and fast. The introduction of reward points and discounts have also encouraged a majority of Indians to try cashless payments.

Here are some of the channels that contributes hugely towards cashless transactions:

Retail Purchases Through ECS:

With the evolution of mall culture, consumers are able to locate everything they need for their household at one place. As these malls are equipped with state-of-the-art POS machines, consumers prefer making cashless payments using ECS rather than using cash to avoid the troubles of finding change. With cashless payment system, the exact bill amount is debited without any extra cost making it easier and quicker for the consumers. Retail Electronic transactions have contributed a whopping Rs. 65 lakh crore in total cashless payments of FY 2015.

ECommerce Industry

Given the fact that, the eCommerce portals in the country registered retail sale worth of $5.30 billion in 2014, the eCommerce industry of India contributes highly towards cashless or virtual payments. Offering quality products at the most feasible rates and delivering them right at your doorstep as per your convenience. Although, COD was the most favored payment mode for these sales, large number of sales were registered through cashless transactions as well.

Online Payment of Utility Bills, Recharge etc.

With the introduction of online services like PayTM and FreeCharge, payments of utility bills, as well as recharge for Mobile or DTH service, have become a lot easier. Consumers are often attracted towards these services as they are being offered free coupons and discount of a same value as you pay for bills or recharge.


Since its introduction, mobile wallet usage in India is growing rapidly registering transactions worth Rs. 1 lakh crore in FY 2015. Almost 50% of transactions using mobile wallet were made for remittances while the rest contributed to bill payments, recharge for Mobile or DTH service or to book movie or travel tickets online. A part of these remittances were also contribute by the booming freelance industry of India.

The Road Ahead…

All the major Banks in India are trying to promote online transactions in the country including the rural parts of the country. Being a huge fan of e-Governance, Indian Prime Minister – Mr. Narendra Modi has initiated a project estimated at INR 20,000 crores to build a broadband highway connecting 2.5 lakh panchayats across the country. Once fully set up, this infrastructure would help the rural India connect with the urban India while boosting the rate of online transactions in the country.

Apart from the infrastructure to connect every corner of India through the internet, it is also important to improve the average connectivity speed in the country. To offer better and faster internet access to a larger audience in the country, Reliance Jio is all set to launch its 4G services across 800 major cities in India in order. As the majority of Smartphone users are equipped with better and faster internet connection, cashless transactions in India will surely experience a tremendous leap in the coming years.



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