By Udbhav Bhargava
Covid-19 is nothing short of a pivotal point for Indian fintech industry. The fear of contracting the virus forced people to take contactless payment methods, which led to the soaring digital transactions
WHAT ARE FINTECH COMPANIES?
Financial Technology (FinTech) defines the emerging intersection of finance and technology services. So Financial Technology (Fintech) is used to describe new tech that seeks to enhance and automate financial services delivery and utilization.
Payment apps have seen the number of new users and merchants on their sites grow. In the past three months, Unified Payments System (UPI), Immediate Payment Service (IMPS), Bharat Interface for Money (BHIM) transactions were also shooting through the roof.
HOW MUCH IS THE GROWTH IN DIGITAL TRANSACTIONS?
According to data from India’s National Payments Corporation (NPCI), the sum transacted via UPI in July 2020 was around 2,90,537.86 crores, the highest transaction volume ever, the most since the interface was launched was 149.73 crores. The sum transacted through BHIM was approximately 6,395.75 crores, the most since this year in February. In July, IMPS recorded the highest record of transactions amounting to some 2,25,775.24 crores. The volume of card and mobile payments at Rs 10.57 lakh crore surpassed ATM withdrawals in the fourth quarter of 2019, which amounted to Rs 9.12 lakh crore for the first time
WHAT IT INDICATES?
Those figures suggest that digital payments are gradually beginning to make Indian consumers more relaxed. Last year investments in the fintech industry soared. With this increased acceptance and preference over the past three months for contactless payment methods, one would think that fintech funding would reach new heights as well. BUT, contrary to expectations, the funding that went into the fintech start-up space in Q2 2020 was the lowest in the past nine quarters — in the April-June quarter of this year only $184 million was invested. Fintech start-up investments.
REASON FOR DECLINE
The NBFC sector is witnessing several liquidity constraints, overall credit disbursements, some of which were also affected by those facilitated by fintech companies. Payment fintech is a competitive segment; it operates on thin margins and is under relentless strain. Unlike most industries, VCs have opted to wait to see how companies are weathering the COVID storm like (in) fintech (space). The COVID scenario is altogether a new experience for the Indian FinTech segment.
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