Online payments went down by 30% amid lockdown: Report

Online payments dropped by 30% during the nationwide lockdown, hit by fall in digital transactions across sectors like logistics, travel, real estate and food and beverages, as per a report by fintech platform Razorpay.

The report is based on transactions on Razorpay's platform between February 24 to March 23 (before lockdown) and March 24 to April 23 (during lockdown).

It found that digital transactions recorded highest fall of 41% in Gujarat followed by Madhya Pradesh (39%) and Tamil Nadu (26%).

Interestingly, segments like utilities (bill payments), IT and software, and media and entertainment saw a growth of 73%, 32% and 25%, respectively as people stayed indoors.

"Transactions in logistics dropped by 96% due to gaps in supply chain. Travel sector declined by 87%, real estate by 83%, F&B by 68%, and Grocery by 54%," the report said.

Digital transactions in cities like Ahmedabad, Mumbai and Chennai took a hit of 43%, 32% and 25%, in these 30 days (March 24 to April 23), it added.

"A significant drop of 30% in online payments in the last 30 days is something we are seeing for the first time after demonetisation," Razorpay CEO and co-founder Harshil Mathur said.

He added that in the first two weeks of March before lockdown, the overall online spending increased by about 10% but later saw a dip primarily owing to precautionary measures which people started to take by staying indoors.

Mathur said while Covid-19 continues to create uncertainty on a number of fronts, the pandemic is also a turning point for the fintech industry.

There has been a growth in adoption of digital payments, especially in tier II and III cities in the last 30 days of lockdown.

"I believe this is a huge opportunity for fintech companies, some of them may have to re-examine their business models after COVID-19, prioritising growth and customer acquisition over profitability. The fintech industry will be forced to evolve, think big and act boldly which will eventually result in innovations in payments and banking solutions to be able to meet new customer demands and behaviours," he said.

During lockdown, online donations (transactions) towards NGOs increased by 180%, the report said.

In payment modes (during lockdown), UPI made the highest contribution of 43%, followed by debit and credit cards with 39% and netbanking with 10%.

However, compared to the 30 days before lockdown, transactions via UPI, cards and netbanking declined by 37%, 30% and 28%, respectively, the report added.

Among UPI apps, Google Pay contributed the highest with a 46% share followed by PhonePe with 29% and Paytm with 10%. During the lockdown, Paytm saw a drop by 47%, Google Pay 43% and PhonePe%.

Mobile wallet transactions, particularly in tier II cities saw a spike in the last 30 days, owing to increased contribution to PM Cares Fund and cashback offers and transactions via JioMoney increased by 66%, AmazonPay by 63% and Paytm by 43%, the report said.