NEW DELHI: Short-term financing segment, buy now pay later (BNPL), has grown to become among the favourite payment methods, having surged a massive 637.27% in 2021 compared with 569% growth observed in 2020, according to Razorpay’s ERF Report.
This indicates that BNPL is making credit mainstream with easier and faster access.
Further, the subscription economy is booming with recurring payments seeing a significant growth of 225.31% in 2021. Other payment methods also contributed significantly to total transactions in 2021, such as UPI (63.02%) and card (25.92%). Interestingly, bank transfers took a whopping hit, with transaction volumes declining 51.77%.
These are the findings of the 10th edition of ‘The (Covid) Era of Rising Fintech (ERF)’ report by Razorpay, a full-stack financial solutions company. The report is based on online transactions held on the Razorpay platform from January 2020 to December 2021.
As per the company, digital transactions are becoming a popular choice in everyday households, as transactions related to telecom and electricity bills saw a growth of 3,640% and 2,353% respectively, from 2020 to 2021.
Further, lifestyle and fashion were the highest contributors of e-commerce transactions in 2020, however, it has been overtaken by groceries in 2021, which saw a growth of 233%. More and more people became health conscious in 2021, as fitness related transactions saw growth of 611%.
Area wise, Delhi pulled ahead of Karnataka in digital transaction volumes, accounting for 18.69% of all online transactions and grew 208.82% year-on-year in 2021.
For the first time, Goa and Jammu & Kashmir warmed up to digital transactions with 162.54% and 161.44% growth rates respectively in 2021. “This could possibly be a result of revived tourism in these states," the report said.
Further, tier-2 cities and tier-3 cities recorded a significant average growth of almost 50% in transaction volumes, from 2020 to 2021.
Harshil Mathur, CEO and co-founder of Razorpay, said, “On one hand, consumers are spending more with the help of user-friendly financial products like BNPL while on the other, they are also saving through investing in mutual funds and indulging in active trading. While the first wave saw digital penetration among the first layer of businesses like D2C brands, the second wave drove more traditional offline businesses to adopt digital modes of transaction."
The report also highlighted that food and beverages and financial services sectors were top contributors of the total transactions, followed by games, utilities, and e-commerce.
With more people opting for freelancing, services saw the highest growth of 769.86% in transaction volumes as compared to 2020. While, housing and real estate was the second fastest-growing sector in 2021. It saw a growth of 315.65% and had four times the transactions it did in 2020.
Notably, the increase in usage in the gaming industry is the result of rising popularity of Fantasy League and Esports. With an increased demand for games among consumers, game developer tools were in demand, with transaction volume for the sub-sector growing by 365.83% in 2021. Interestingly, tier-3 cities saw the highest growth in online gaming with transaction volumes growing by 45.56%.
As per the report, with remote or hybrid work becoming the norm, professionals are perhaps settling in their hometowns as this sector in tier-2 and tier-3 cities saw an average growth of over 210% compared with 2020.
