42% Indians say they have increased their use of digital payments in last 3 weeks during lockdown

April 14, 2020, New Delhi: The COVID-19 outbreak has the entire world worried and has become one of the biggest threats to the global economy so much so that many are comparing it to The Great Depression of 1929. In India, the cases of COVID-19 have risen from under 100 on March 14th to over 10,000 in a month despite the 21-day lockdown instituted by the Government of India which now stands extended to May 3rd. With this lockdown in place, the only supply chain that is moving is that of essential supplies and services and per feedback from consumers seem to be seeing a huge spike in digital payments in those particular areas as people stay away from cash and ATM usage due to the risk involved.

LocalCircles conducted a survey to check if the use of digital transactions in India had increased in the three weeks from March 23rd till April 13th. The survey received more than 42,000 responses.

The first question asked citizens how have they been going about making their payments since the Coronavirus outbreak in the last 3 weeks. 33% said they have started making more digital payments and using less cash, while 9% said they have started using only digital payments and no cash at all. Only 4% said they have started using more cash and less digital payments. 53% said their payment ways have stayed unchanged. These stats also point towards the fact that 42% citizens have started making more digital payments since the Coronavirus outbreak.

42% citizens say they have started making more Digital Payments since Coronavirus Outbreak

Citizens were asked since Coronavirus Outbreak in the last 3 weeks, for what kind of purchases are they using digital payments most frequently. 35% said they are purchasing groceries and medicines i.e. essentials in the market while 26% said they are purchasing groceries and medicines, i.e. essentials on eCommerce sites. 3% said they are making payments of food delivery, 1% said payments at restaurants, 12% said payments for mobile recharge, 4% said payments for taxi and transportation services, and 8% said they have been using digital methods to pay for other services. Only 11% said they did not use digital payments at all in the last 3 weeks. It may be noted that restaurants (except home deliveries), taxi and transportation services have largely been shut during the majority of this 3 week period barring a few days before March 25th.

Many retail stores and local general stores have been reporting a major rush and spike in orders because of the lockdown and as people purchase and stock essentials for use during this period.

Buying essentials in market and on eCommerce apps along with mobile recharge top use case for digital payments since Coronavirus Outbreak

India’s ecommerce platforms, especially the ones delivering groceries have also seen a massive spike in orders for essential goods in the last 3 weeks with some reporting 5X demand.

For both retail stores and ecommerce orders, what is common is that many of the consumers are now making their payments via digital payment mechanisms and taking contactless delivery of goods where possible.

46% citizens say they have increased their use of Digital Payment apps (Paytm, Phonepe, Gpay etc.) since Coronavirus Outbreak

The next question asked citizens if they have increased your usage of digital payment apps (Paytm, PhonePe, WhatsApp Pay, Google Pay, BHIM, etc.) in the last 3 weeks during the COVID-19 lockdown. 45% said ‘yes’ and 39% said ‘no’.

The National Payments Corporation of India (NPCI)has been urging Indians to use more digital payment methods, so that people do not step out even to go to the ATM, reduce social contact and curb the spread of COVID-19 virus. A RBI circular also urged the public to avoid going out to buy essentials and avoid social contact by using digital payment methods like UPI, NEFT, IMPS, etc.

When consumers were asked what digital payment app have they been using the most in the last 3 weeks, since the Coronavirus outbreak. 33% said Paytm, 14% said Google Pay, 4% said PhonePe, 10% said Amazon Pay while 6% said Bhim. 33% said they are using other apps.

PayTM, Google Pay among top digital payment apps being used by citizens during the Coronavirus outbreak

The lock down has also brought many first-time users who were not very tech savvy closer to the digital payments’ ecosystem as they had a need to make digital payments for essentials.

Visa top card being used by citizens during the Coronavirus Outbreak

When it came to use debit/credit cards in the last 3 weeks, 54% said they have been using Visa while 30% said they have been using Mastercard. 12% said they have been using Rupay while 4% said Others.

The risk areas outlined by consumers themselves with respect to cash usage include, social exposure, ATM usage and above all, the exchange of currency notes when transacting. The WHO has advised people to maintain proper hygiene after handling currency notes.

Although, the number of overall UPI transactions and digital transactions have declined in the last 30 days as spending is primarily limited to a few areas, the number of digital transactions as a percentage of total transactions post Covid-19 outbreak have risen, as people are largely only shopping for essentials due to the lock down.

As India now gets ready to stay locked down till May 3rd, consumers will continue to avoid usage of ATMs and cash for their safety. What this means is that more and more consumers will end up using digital payments. This is a 2nd tailwind for digital payment companies after the one in Nov 2016 when India demonetised its currency.