Food Service Industry is Leading the Digital Payments adoption

The Indian food-tech industry has grown exponentially in the past few years with a proposition anchored around convenience & value. According to a new report by Google and Boston Consulting Group (BCG), the sector is expected to grow at a 25-30% CAGR to become $8 billion market in the next two years.

“Overall online spending in India is rising rapidly and expected to grow at 25% over the next 5 years to reach over $130 Bn. Riding on the wave of rapid digitization and steadily growing consumption, the reach of Food Tech companies has grown six times over the last couple of years and will continue to increase further,” said Rachit Mathur, Managing Director and Partner; India Lead of BCG’s Consumer & Retail Practice.

Also, Razorpay, the leading full-stack financial services company, recently launched the fourth edition of ‘The Era of Rising Fintech’ report. The report provides an in-depth study of a rapidly evolving FinTech ecosystem in India. It analyses the patterns of digital transactions and the impact of industry innovations such as UPI which are harnessing this digitally inclusive economy.

The report clearly mentioned that food and beverages sector was one of the top sector for digital payments sitting at 26 per cent.

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In 2019 Bangalore was the most digitised city (23.31%), whereas Delhi, climbed up the ladder to the second spot (10.44%) followed by Hyderabad (7.61%). (2018: Bangalore 29.26%, Hyderabad 9.02% and Delhi 8.36%)

In 2019 (Top states), Karnataka saw the highest adoption of digital payments (26.64%) followed by Maharashtra (15.92%) and Delhi NCR (13.01%)

While the usage of Cards (46%) and Netbanking (11%) saw a decline in 2019, down from 56% and 23% for cards and Netbanking respectively in 2018, UPI (38%) went up from 17% in 2018

“A growth of 338% in digital payments in a year (2018-19) is massive. It’s the highest we’ve seen so far in the country. Among other factors that led to this exponential growth, it was UPI which rose in prominence, dominating other modes of transactions,” shared Harshil Mathur, CEO & Co-Founder of Razorpay.

Not only this, the entry of new age food tech players has led to a massive transformation of how restaurant industry operated in last few years. Growing disposable income and busy lifestyles of the young and working population, coupled with increasing internet penetration and rising smartphone users, will continue to drive India’s food tech market through 2021.

With more than 900 food delivery start-ups in the country, the food tech space saw a different wave of tech-emergence in the country. Thus, we can say that the emergence and success of food delivery and ordering platform is a matter of convenience, reliability and easy access. From providing backend support, to enabling easy ordering and payment, technology has set a new dimension for the growth of restaurants in India.