The coronavirus pandemic has knocked down the value of digital transactions processed by leading Indian firms, both online and offline, by an estimated 30% over the past few weeks.
With major payments sectors—including retail, hospitality, and air travel—clobbered by the global pandemic, the coronavirus restrictions have significantly depressed the value of digital transactions.
To be sure, customer traffic on digital channels remains high. However, the constraints imposed by the lockdowns seem to preclude many large, discretionary transactions.
“The hit is larger in metros for now, not India-wide,” said a business executive.
Moreover, the lockdown has seen increased online spending in segments such as utility, groceries and food delivery services.
Daily routine changed
“Considering the current situation in India, there is no denying the fact that the daily routine of the consumers has been impacted,” said Kush Mehra, chief business officer of Pine Labs, a merchant platform company.
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“As Indian consumers start to limit their physical footprint in stores, it is too early to assess the actual impact on the offline transactions across all merchant categories.”
According to online payment solutions provider Razorpay and payment gateway platform CCAvenue, transactions processed in the travel segment – which accounts for over 25% of all online spends – have fallen by nearly 35% to 40%.
Meanwhile, offline aggregators and service providers, such as Pine Labs and merchant acquirer BharatPe, said that shuttered shops in India’s leading metros have dragged down daily volumes.
Travel season impaired
March to May traditionally attract the highest travel-related spending by Indian consumers. This could change this year if the situation persists.
“March and April see customer demand for travel. This virus posts a cloud on future transactions through the sector which brings nearly 30% of the payments for the online payments industry,” said Vishwas Patel, CEO, CCAvenues.
Patel said the demand for new tickets has dropped by 35% in a few weeks.
Harshil Mathur, CEO of Razorpay, lamented the impact of the pandemic on air traffic. He said:
“Aviation, which contributes nearly one-fourth of all online digital transactions, has seen a fall of nearly 40% due to cancellations and refunds because of restrictions on international travel.”