Step aside, China: India is now the world’s fastest-growing mobile payment market

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When the Indian government made a drastic move to ban 500 and 1,000-rupee currency notes in November 2016, the talk was mostly about fighting black money and the circulation of fake currency. A push towards a digital economy was mentioned mostly as an aside.

Though India’s central bank made it clear in its annual report last year that demonetization failed to purge black money, the ban forced people to go digital. The effects of that can now be seen.

According to research firm eMarketer, India is now the world’s fastest-growing “proximity mobile payment” market in the world. Proximity payments refer to scanning, tapping, swiping, or checking in with a mobile device at the point of sale.

The number of mobile payment users in India surged 75.5 percent from 32 million in 2016 to 56.2 million in 2017. This number is expected to grow to 77.8 million – nearly 30 percent of India’s total number of smartphone users – this year.

Unlike China, where mobile payment has become ubiquitous, India’s growth rate comes from a low user base. So it’s not as if India has caught up with China’s mobile payments scene – instead, it has become the fastest-growing large market. This will add to expectations that India will go the China way in becoming a digital, mobile economy.

These numbers are based on eMarketer’s analysis of data from research firms, government agencies, media firms, and public companies, plus interviews with advertisting and publishing executives as well as ad buyers.

Demonetization turned into a windfall for mobile payment companies in India, especially Paytm. It had announced a 700 percent increase in user traffic and a 200 percent increase in its average transaction value within a week after the move.