India has emerged as one of the leading innovation hubs over the last few years. Moreover, it is expected that India to have more financial technology startups in the next five years. Presently, the financial technology market in India is extensively diversified. However, the two broad segments where FinTech startups are most active in the country include payments and lending.
Both of these segments have performed exceptionally well over the last few quarters and are expected to continue their upward momentum from the short to medium-term perspective. For instance, the digital lending industry in the country is expected to grow dramatically with a potential market size of more than US$100 billion in the next two to three years.
Many financial technology startups in India are focusing on providing loans to students and the younger working population. In the past, loan disbursement was completed through cash or instant transfer to digital wallets. However, both of these options attracted processing charges and interest, especially when the transfer was in the form of cash. To overcome these processing charges and interest and to ensure real-time transfer to beneficiaries, lending financial technology startups in the country are entering into a strategic partnership with gift card issuers in India, such as Qwikcilver.
Lending FinTech startups, after the integration with Qwikcilver, are offering a wide range of gift cards and digital gift card solutions for their users. Moreover, the short-term disbursement of loans for these users is taking place in the form of brand gifts of all major online and offline retailers in the country. Recipients of these physical and digital gift cards are allowed to use them for purchasing products of their choice, and therefore, allowing users to avail themselves of the loan facility. Additionally, since users of these lending financial technology startups are opting for digital gift cards, they are receiving the gift cards in real-time.
Through their strategic partnership with Qwikcilver, digital lending startups have been able to offer the instant gratification of loan, unlike other alternatives of loan disbursement. Moreover, the strategic partnership with Qwikcilver has allowed digital lending startups to offer their users gift cards for over 250 plus brands. Notably, Qwikcilver has also helped these digital lending startups to avoid higher processing fees and interest. Moreover, the discount offered by Qwikcilver to these digital lending startups on gift cards has enabled them to offset their operational cost while allowing them the option to pass additional benefits to their users.
With the online lending market expected to continue its upward trajectory over the next four to eight quarters in India, PayNXT360 expects microlending with gift cards, primarily digital gift cards, to become more mainstream as compared to lending in the form of cash and digital wallet transfer.
According to PayNXT360’s Q2 2021 Global Gift Card Survey, gift card industry in India is expected to grow by 22.1% on annual basis to reach US$ 5,533.7 million in 2021. Despite near-term challenges in 2021, medium to long term growth story of gift cards in India remains strong. The gift card industry in India is expected to grow steadily in H1 2021 and record a strong growth in H2 2021. The growth momentum is expected to continue to grow over the forecast period, recording a CAGR of 18.4% during 2021-2025. The gift card market in the country will increase from US$ 4,533.7 million in 2020 to reach US$ 10,869.3 million by 2025.