Mobile payments are almost on par with credit card use among some consumers in India, according to new data from financial services provider FIS.
A survey of internet users conducted on behalf of the firm by Kantar TNS in December 2016 found that 40% of respondents had used a credit card to complete a digital shopping transaction, while almost the same number (37%) had used some kind of mobile payment service.
Credit cards held a similarly narrow lead over mobile payment systems for respondents making travel-related purchases and paying utilities. However, mobile payments were more commonly used than credit cards for movie or entertainment purchases.
But that’s not the only way that mobile devices are changing India’s financial sector.
FIS also found that mobile banking is a big draw among younger consumers in the country. The survey revealed that 88% of respondents ages 18 to 36 had used a mobile device to pay a bill from their bank account, while 84% had transferred funds between bank accounts on a mobile phone.
Mobile banking services are emerging to fill a need among a group of consumers in India who have long lacked access to traditional retail banking services. The uptake of such services, now widely available to smartphone users, has meant that people living in areas lacking brick-and-mortar bank locations can now take advantage of the benefits offered by financial technology platforms.
These new fintech platforms are most likely to arrive via smartphone apps. India’s population of smartphone users is expected to climb from 267.1 million this year to 409.8 million by 2021.
Regulators in India this year approved a new type of bank designed specifically with customers new to retail banking in mind. These banks, known as payments banks, can operate savings accounts accepting deposits of up to INR100,000 (roughly $1,500) and let customers make digital payments with their accounts, but do not accept loans.
In May, digital payments processor Paytm launched its own payments bank, in a clear bid by the company to move further into financial technology services. The firm now offers a 4% interest rate on savings accounts and doesn’t charge fees for the online transfer of funds.
In markets like India, where there is a void for retail banking services, it’s likely that innovation in financial services will continue to come from mobile-first platforms like Paytm.