DATA STORY: Why South India is crucial to Modi govt's digital payments push

Chaitanya Gudipaty

Moneycontrol News

Call them Madrasis or tag them geeky nerds, south Indian citizens are the country’s quickest adopters of digital payments. Digital payment adoption rates — a byproduct of Prime Minister Narendra Modi-led government's demonetisation drive — among non-English internet users across India is highest for Telugu and Kannada speakers at 37 percent, followed by Tamilians at 36 percent, according to a KPMG study.

Players in the web-based payments arena should take note as in the next four years, digital payment adoption rates of internet users whose speak Telugu, Kannada and Tamil are expected to rise to 53 percent, 55 percent and 55 percent, respectively. Also, there is an untapped opportunity in speakers of other regional languages such as Bengali whose digital payment adoption rate stands at 9 percent.

The KPMG report — Indian Languages: Defining India's Internet — anticipates the number of regional internet users adopting digital payments to rise four times to 175 million by 2021 from just 47 million in 2016.

Also notable is the fact rural Indian language users have higher engagement levels per week – 530 minutes against the urban average of 482 minutes. Besides, rural internet users spend 93 minutes a week on digital payments and government services, eight minutes longer than their urban counterparts.

The Rise of The Indian Internet User

Regional internet users have grown to 234 million in 2016 from just 42 million in 2011. In comparison, English internet users account for 175 million of India’s overall internet user base of 409 million, according to the KPMG report released in April 2017.

In fact, 9 of every 10 new internet users will likely be regional language speakers over the next five years, the report states, adding that the user base will grow at a CAGR of 18 percent to 536 million by 2021.

 

Reduced mobile data charges, rising disposable incomes, increased internet penetration and surging local language content ecosystem are some of the factors driving the spurt in internet adoption among local language speakers in India.

Among regional language speakers in 2016, Tamil had the highest internet adoption levels at 42 percent followed by Hindi and Kannada at 39 percent and 37 percent, respectively. Internet adoption among Telugu speakers stood at 31 percent.

RBI Speak

The digital payments industry has been one of the biggest beneficiaries of cash crunch induced soon after demonetisation of old Rs 1,000 and Rs 500 denomination notes. Though cash is now back in the system, the government’s push for adoption of mobile payments — through systems such Unified Payments Interface (UPI), BHIM app and Bharat Bill Payment System (BBPS) — hasn’t reduced even a bit.

While electronic transactions declined to Rs 109.82 lakh crore in August 2017 from the March peak of Rs 149.59 lakh crore, the transactions stood at Rs 107.38 lakh crore in July according to Reserve Bank of India data. In FY17, total electronic and card payments cumulatively grew by 46 percent to Rs 139.67 lakh crore in value terms and up by 65 percent in volume terms to 965.5 crore transactions from a year ago, as per RBI’s annual report.