Gaming & Digital Payments: How UPI & Wallets Are Driving a Cashless Gaming Ecosystem in India

According to the State of India Interactive Media & Gaming Research FY24, the gaming industry in India is expected to grow by more than 2.4 times in the next five years. The popularity of poker and rummy games, the craze for fantasy leagues and the rise of casual and hyper-casual games are the evident growth drivers. However, experts believe digital payment is the force behind the scenes.

Indian rummy apps and fantasy league platforms are part of the real-money games segment, an area where convenient payments are a must-have feature. Even other segments of video games have in-app purchases and various other microtransactions that require a seamless payment experience.

To achieve its growth targets, the gaming industry is dependent on a cashless ecosystem. Or, inversely, perhaps it is digital payments that have convinced the gaming industry to dream big!

Gaming in a Cashless India

The gaming industry recorded a revenue of $3.8 billion in FY24. By FY29, this is expected to grow to $9.2 billion, which is an impressive CAGR of approximately 20%. So far, the real-money games segment has been at the helm of affairs in revenue terms. Out of the $3.8 billion earned last year, around $2.4 billion is attributed to real-money game platforms. This is largely due to the success of rummy game pioneers like RummyCulture, who have helped Indian rummy prosper in the online format.

By the end of FY24, the total number of gamers in India was 591 million. The gaming community saw a 4% year-on-year increase, while the number of paying gamers is increasing at 6%. As the number of paying gamers increased, so did the revenue from other gaming segments. In-app purchases and microtransactions are gradually increasing, particularly in the mid-core, hardcore, casual and hyper-casual categories. These four segments are expected to be of greater significance in the future due to their higher growth rate.

Apart from advertisement incomes, the higher forecasted growth rate of mid-core, hardcore, casual and hyper-casual categories is an indication of a growth in in-app purchases and microtransactions. This promising growth path is attributed, in large part, to the seamless payment solutions provided by Unified Payments Interface (UPI) and wallets.

Swipe, Scan, Click, Play

A survey conducted in 2023 among Indian gamers has shown that 62% of them prefer UPI for any in-game transactions. Another 26% showed a preference for digital wallets. One may assume that a small minority of gamers go for other modes, like card payments. This preference indicates the overwhelming popularity of UPI within the gaming community and the overall preference for digital payments. These digital payment modes capitalised on a user-friendly interface and the ability to easily integrate with the gaming ecosystem.

The introduction of UPI has revolutionised the Indian digital payment landscape. Since its introduction in 2016 by the National Payments Corporation of India (NPCI), UPI has become synonymous with financial transactions. This real-time payment system has been crucial to the growth of online gaming in India.

In 2024, UPI accounted for an overwhelming 83% of India’s total digital payments, rising from a lowly 34% in 2019. Last year, in October alone, 16.58 billion financial transactions were processed by UPI. The Reserve Bank of India (RBI) reported that UPI has grown at a CAGR of 74% over the last five years, a testament to its exponential growth and acceptance. Notably, mobile wallet transactions also expanded at a CAGR of over 72% in India during the years 2019 and 2023. Between 2024 and 2028, these transactions are expected to grow at a CAGR of 18.3% to a volume of more than ₹531 lakh crores.

The widespread adoption of digital payments has been crucial in building India’s digital economy. Needless to say, this was also a period where the gaming industry saw a meteoric rise.

The Digitised Growth

For a gamer, the real-time transaction capability of UPI and wallet has made in-game purchases easy. They can now acquire virtual goods and services instantly. This has not only improved the gaming experience but also boosted the spending propensity in games. The average revenue per paying user, for instance, increased by 15% between FY23 and FY24. The number of paying gamers has also increased during the period from 140 million to 148 million in India. Consequently, the ease of digital payments is improving the revenue numbers for game developers and platforms.

The successful link between digital payments and gaming platforms is down to the easy integration of these payment modes. UPI and wallets have democratised user access to online gaming. Through direct links to bank accounts, they have eliminated the need for credit or debit cards. This kickstarted a symbiotic relationship between UPI, wallets and the gaming industry.

Pay and Play

The gaming industry has positioned itself in the entertainment sector as a vibrant recreational option. Its use of cutting-edge technology and features has kept gamers engaged with smartphones and consoles. Payment technology is one such example, which has helped the industry to reduce the dependency on ad incomes and open multiple alternative revenue streams.