Swipe right: India’s love affair with digital payments

Nearly 90 percent of Indian consumers with internet access prefer digital payment options for online shopping, according to a report by Amazon Pay India and Kearney India. And this is true for small-town India as well.

The report titled ‘How Urban India Pays’ said that about 65 per cent of transactions by consumers in India’s smaller towns are now digital, while in bigger cities the proportion was about 75 per cent.

The survey covered 120 cities, 6,000 consumers and over 1,000 merchants across India, and was conducted in the first quarter of 2024, when regulatory action against some fintechs was at its peak.

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About 5 percent of the respondents preferred digital payments even for offline transactions. Over 85 per cent of people gave strong preference to digital payments for discretionary expenses like electronics, clothes and shoes.

Affluent consumers lead the way with the highest level of digital payment usage (DDPU), using various digital payment methods for 80 percent of their transactions. Meanwhile, aspirational segment consumers use digital payments for 67 percent of transactions.

There is no restriction on age and gender.

Millennials and Gen Both men and women use digital payments in about 72 percent of their transactions, indicating gender parity.

While UPI ranks highest and is preferred by 53 per cent of consumers for online shopping, digital wallets and cards (credit, debit and prepaid) are preferred by 30 per cent of consumers. Cash still dominates offline purchases, with 25 percent of consumers preferring UPI and 20 percent preferring digital wallets and cards. Co-branded credit cards like Amazon Pay ICICI Credit Card are gaining momentum; 46 percent of survey respondents reported that they have at least one co-branded card because of its attractive rewards structure.

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Emerging channels like BNPL gain visibility as convenience, awards drive India’s digital payments transformation, with 87 per cent awareness of credit-based offerings among respondents.

Ahmedabad, Pune, Indore, Jaipur, Lucknow, Patna, Bhopal and Bhubaneswar – despite relatively lower retail capacity compared to the top metros – demonstrate higher digital payment adoption than larger metros.

traders bring change

The study shows that 46 percent of transactions for street vendors (paan shops, fruit and flower vendors, food stalls and grocery stores) are now digital. The share of digital payment mediums in the total transactions of the Indian merchants surveyed is about 69 percent.

Across a variety of merchants, the top reasons for preferring digital payments are convenience, trust, security, and the ability to track transactions. About 63 per cent of merchants admitted accepting digital payments for transactions below ₹1,000 to prevent customers from switching to competitors that accept digital payments.