The Indian gold market worth $34 billion is gradually turning digital. Online payment platform Paytm initially offered the service to purchase gold online in April 2017. This was followed by e-wallet company like PhonePe started selling digital gold in April 2018.
The digital purchase allows customers to buy gold as little as the amount of 0.1 grams. The customers have an option of either selling the gold later or have it delivered at their doorstep.
The online gold purchase has been popular throughout the world has grown rapidly over the years while it is just at an infant stage in India, where the gold bars and jewels are kept in hand and given as gifts.
Somasundaram PR, managing director of World Gold Council’s (WGC) India operation estimates that the digital gold market in India is to experience rapid and significant growth in the coming one or two years assessing the current popularity of the market.
The digitization of the Indian economy is likely to boost the digitization of gold market.
The WGC predicts the total Indian gold demand to be 727 tonnes in 2017 which is likely to reach 800 tonnes in 2018. The gold demand is likely to rise with the popularity of digitization in not only during the traditional wedding and festival season but throughout the year.
Nevertheless, it is difficult to measure the number of buyers in the market because of the online access. According to Paytm, it facilitated about $18.4 million in the first six months of their service offering last year.
The prime two reasons for the popularity of digital gold market is the ability to buy any amount of gold and discounts while purchasing online apart from the convenience of online purchase.
This is appealing to the younger generation as there are gold-backed bonds and websites selling coins and jewellery that can be shipped for free or cheaply within India.
Storing physical gold is a hassle in India and most youngsters do not prefer to wear gold these days. However, they understand the value that this asset holds.
The preference to digital gold also attributes to the safety of storage online rather than having the physical metal at home and worrying about its safety.
The digital sales also have fewer chances of fraudulent activities because Security experts mention safe storage of gold. The gold to be trades physically exist in an MMTC PAMP vault are insured meaning deceitful activities have very less probability to occur.
Digitial service provider Paytm is still in the lead when it comes to e-wallet space in India. The company announced two innovative gold gift and savings plans this month.
This has been the first announcement after launching its first digital gold product in April 2017. The company Paytm is backed by Japan’s SoftBank Group and China’s Alibaba Group which sources its 24-carat gold from MMTC PAMP.
The digital gold rush seems to have a gradual growth in the Indian market and is getting popular amongst the youth. The digital service providers have proven their credibility towards the transaction of gold in this medium.
The popularity of this digitization would mean a new era of buying and selling gold in the Indian gold market which is one of the favourites of the Indian household. This will also boost sales throughout the year instead of limiting higher sales during festive occasions.