India’s payment gateway market is becoming a cornerstone of the country’s shift towards becoming a digital economy. From 2017 to 2023, the market grew from USD 0.40 billion to USD 1.21 billion expanding at a CAGR of 17.0%. This expansion primarily stems from advancements in e-commerce, mobile payments, and fintech innovations.

India Payment Gateway Market Size in USD Bn (2017-2023)

Let’s delve into how various factors, including increasing online shopping, mobile payments, and innovations in technology assist Large Enterprises, Micro and Small Enterprises (MSEs), and Mid-Size Enterprises in shaping the Indian Payment Gateway market.

Large Enterprises Using Technology to Scale Up

·       Large enterprises dominate the payment gateway market owing to their ability to handle huge volumes of transactions without compromising on security and user-friendliness.

·       As of 2023, large enterprises accounted for 60 % of the payment gateway market share in India and approximately 55% globally

·       Large enterprises require payment gateways capable of processing high traffic and large transactions efficiently. Subsequently, in 2022, UPI (Unified Payments Interface) grew 74%, while digital wallet payments at stores rose from 5% of transactions in 2019 to 35% in 2022.

·       Additionally, in 2023, the total outstanding credit cards in India stood at 97.9 million with 16.7 million cards added.

Micro and Small Enterprises Making Payments Accessible

·       Micro and Small Enterprises (MSEs) are rapidly adopting digital payments. The availability of affordable smartphones and cheaper mobile data has made it much easier for these businesses to use payment gateways effectively.

·       A survey of 500 SMEs revealed that 55% of SMEs had fully adopted digital payment systems, while 30% had partially adopted them, and only 15% had not adopted any digital payment methods at all.

·       After adopting digital payments, small businesses experienced an average annual revenue increase of 46.7%. This demonstrates the financial impact of integrating digital payment solutions

·       Fintech solutions, such as mobile-based payment systems, simplify the process for MSEs to enter the digital payment market. As a result, between 2017 and 2022, digital payments grew from INR 2,071 crore to INR 13,462 crore.

·       With India having 750 million internet users and 500 million e-commerce users in 2022, MSEs have a substantial opportunity to grow and compete in the payment gateway market.

Mid-Size Enterprises Balancing Innovation and Growth

·       Mid-size enterprises strike a balance between the flexibility of small businesses and the scale of large ones.  The adoption of digital payment systems benefited MSEs substantially as they reported an average monthly revenue increase from USD 50,000 to USD 57,500, reflecting a growth of 15%.

·       Evidently, these systems allow them to cater to diverse customer needs and expand into industries like food delivery, transportation, entertainment and others.

·       Additionally, India’s global leadership in digital payments further supports these trends. For example, in 2022, India processed 89.5 million digital transactions, accounting for 46% of real-time payments worldwide.

A Bright Future for India’s Payment Gateway Market

India’s payment gateway market demonstrates how technology, supportive policies, and adaptable businesses can work together to create a cashless and digitally empowered economy. As India’s GDP is expected to grow to USD 5,000 billion by 2025, this strong economic foundation supports the continued expansion of the payment gateway market. By addressing the unique needs of large enterprises, MSEs, and mid-size enterprises, the market can continue to innovate and thrive whilst meeting the needs of an increasingly digital world.