"The current 160 million unique mobile payment users will multiply by five times to reach nearly 800 million by 2025. This growth will be driven by a number of demand and supply-side drivers," said the Bengaluru-based management consultancy.
"Mobile payments will drive around 3.5 per cent of total digital payments of Rs 7,092 trillion (US$ 100.61 trillion) by financial year 2025, up from the current one per cent. The total mobile payment users who currently stand at about 162 million would reach around 800 million during this period," the report added.
It is estimated that the wallets will continue to be major contributor in the growth with the constant increase in both frequency and user base.
RedSeer offers its service to various e-commerce companies and venture capitalists including Tiger Global. It estimated that this growth of digital payments will be on the back of increased penetration with offline merchants and the penetration with the unorganised retail sector, which will grow on the back of increased merchant digitisation in cities beyond tier II.
COVID-19 was seen as a catalyst to digital payments across India by RedSeer.
"COVID-19 seems like another demonetisation-like catalyst for the industry. Digital payment providers have been quite hands-on in terms of responding to this situation, by offering enhanced support on essentials such as offering groceries, masks, sanitisers, COVID-19 insurance, offering integration with donations to PM fund and other essential product and services," RedSeer Consulting founder and CEO Mr Anil Kumar said.
It was seen that share of grocery stores increased to 75 per cent in digital payments due to COVID-19 as people opted paying through mobile phone due to safety concerns.
"There is significant headroom for growth of EDC (electronics data capture) terminals in the small retailer universe. Large and mid-sized retailers use more than 2 EDC terminals. Today we have around 5 million terminals, which is almost 5 times that in financial year 2015," the report said.
The report further added that the payment gateway aggregator market in India is expected to grow by 2.4 times driven by large value transactions from current Rs 9.5 trillion (US$ 134.77 billion). The growth at a compounded annual growth rate of 19 per cent in the next five years to reach Rs 22.6 trillion (US$ 320.61 billion) is expected by FY25.
"The payment gateway market today is very competitive, and all leading players are fighting for the market share. Paytm leads this pack and has grown the fastest followed by BillDesk with marquee government clients," the report said.
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