Shift to UPI digital payments in urban India
People in urban India now prefer using digital payments over cash transactions for their day-to-day spending. According to a survey by Kearney India and Amazon Pay India titled “How Urban India Pays,” which included over 6,000 consumers and 1,000 merchants, there has been a significant shift in payment preferences. The report found that 90 percent of respondents favor digital payments for online purchases, and nearly 50 percent extend this preference to brick-and-mortar stores. Additionally, Indian merchants have adapted, with 69 percent of their transactions now conducted through digital channels.
The survey, which covered 120 cities and diverse regions, income groups, city tiers, age segments, and genders, revealed these trends.
“India’s UPI digital payment revolution is firing on all cylinders, propelled by consumers and merchants alike,” said Vikas Bansal, CEO of Amazon Pay India. “With digital transactions penetrating even street vendors and smaller towns, we are at an inflection point.” According to the survey, 65 percent of consumers in small towns use digital payments, while the ratio in larger cities is approximately 75 percent.
Shashwat Sharma, Partner and Financial Services Lead at Kearney India, added, “Our comprehensive research offers a captivating glimpse into India’s digital payment evolution, showing a dramatic shift in consumer and merchant behaviors. From the widespread adoption of digital payments in both online and offline transactions to the rise of emerging payment methods like BNPL, this report provides a detailed look at how India is transforming its payment landscape. We hope this report serves as a valuable resource for stakeholders to navigate and contribute to the dynamic and inclusive digital payment ecosystem in India.”
The report highlighted that India’s UPI digital payment revolution is being led by millennials (aged 25-43 years) and Gen X (aged 44-59 years). However, the movement transcends age barriers, with Boomers (60 years and above) also rapidly embracing cards and digital wallets. Regarding gender parity, both men and women use digital payments in over 70 percent of transactions. The primary motivator for adopting digital payments, as cited by over 60 percent of respondents, is the unparalleled convenience it offers. Speed, efficiency, and lucrative rewards further enhance the appeal, driving widespread adoption.
In terms of digital payment modes, UPI reigns supreme, with 53 percent of consumers preferring it for online purchases. Digital wallets and cards (debit, credit, and prepaid) are preferred by 30 percent of consumers. For offline purchases, cash remains predominant, but 25 percent of consumers prefer UPI, and 20 percent are inclined towards digital wallets and cards.
