India Goes Cashless: 70% of Tech-Savvy Opt for Digital Payments [REPORT]

When examining the demographics of digital payment users in India, Millennials (aged 25–43) and Gen X (aged 44–59) are leading the way in adopting all types of digital payments. However, Boomers (aged 60 and above) are embracing digital wallets and cards at higher rates than some younger cohorts!

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The widespread adoption of smartphones and the Internet in India has led to a dramatic increase in digital payments over the past five years. This trend is evident among both consumers and merchants. A new report titled ‘How Urban India Pays’ by Kearney India and Amazon Pay India reveals many interesting facts and figures about Indians embracing the cashless revolution like never before.

A significant finding from the report is that a whopping 90% of internet-savvy consumers in India now prefer digital payment options for online purchases. The shift towards digital payments is not limited to the online space; it extends to offline as well. About 50% of consumers indicated a preference for digital payments at brick-and-mortar stores, reflecting a broader trend of cashless transactions in everyday shopping experiences.

When examining the demographics of digital payment users in India, Millennials (aged 25–43) and Gen X (aged 44–59) are leading the way in adopting all types of digital payments. Their familiarity with technology and inclination towards convenient payment methods drive this trend.

However, what’s interesting is that Boomers (aged 60 and above) are embracing digital wallets and cards at higher rates than some younger cohorts. This increasing adoption of digital payments by Boomers indicates a widespread acceptance and trust in these methods, transcending age barriers.

The latest study by Kearney India and Amazon Pay India surveyed over 6,000 consumers online and more than 1,000 merchants both offline and online. This extensive research spanned 120 cities and included diverse regions, income groups, city categories, age brackets, and genders.

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Digital Payments Adoption by Income Groups

  • Affluent consumers with an annual income exceeding Rs 2 million are spearheading India’s digital payment revolution, relying on these methods for about 80% of their transactions.
  • The aspiring class, earning less than Rs 500,000 annually, conducts 67% of their transactions digitally.
  • Small towns, with populations under 500,000, are fast catching up, with digital payments accounting for 65% of all their transactions.
  • Consumers in the top six metros (Mumbai, Delhi and NCR, Bangalore, Kolkata, Chennai, and Hyderabad), as well as large and mid-size cities (with populations between 1.5 million and 5 million), report a high digital payment adoption rate of around 75%.

UPI Reigns Supreme, But Other Methods Gain Traction

The growth of the Unified Payments Interface (UPI) in India is undeniable. In June 2024 alone, UPI processed 13.89 billion transactions worth Rs 20.07 trillion. That’s an increase of 48.7% YoY in transaction volume and 36% YoY in transaction value. The findings from the Amazon Pay survey reflect this surge in UPI usage, revealing that a significant 53% of surveyed consumers prefer UPI for their online purchases.

On the other hand, digital wallets and cards, including credit, debit, and prepaid options, collectively account for 30% of surveyed consumer preferences for online purchases. These methods provide flexibility and ease of use, particularly for those who prefer stored-value solutions or specific card benefits such as rewards and cashback.

In offline purchases, 25% of surveyed consumers opt for UPI, while 20% favour digital wallets and cards for their convenience and security features.

Emerging payment methods, such as co-branded credit cards such as the Amazon Pay ICICI credit card, are gaining popularity, with 46% of respondents owning at least one. These cards offer tailored benefits and incentives in collaboration with prominent brands, enhancing consumer spending power and loyalty. Many startups, such as Swiggy, Zomato, Paytm, and Flipkart, have also joined the bandwagon by partnering with financial institutions to launch their own co-branded credit cards.

Innovative payment solutions such as buy now, pay later (BNPL), wearable payments, and voice assistant-based transactions are also gaining traction among consumers in India. BNPL, in particular, has garnered significant attention, with nearly 87% of survey participants aware of its availability, while 34% are already adopting this flexible payment option.

Looking Ahead: A Cashless Future

India has experienced a remarkable surge in digital payments, a trend set to continue unabated in the foreseeable future.

Interestingly, retail digital payments in India have surged from $500 billion in FY19 to an astonishing $3.6 trillion in FY24. The Reserve Bank of India (RBI) projected that this figure could double to $7 trillion by 2030, driven by factors such as increased consumption, widespread internet access, and a robust digital infrastructure.

Even though cash remains prevalent, particularly for daily expenditures below ₹500, the share of cash-based transactions has dwindled to less than 60% in the last five years.

In addition to consumers, merchants are increasingly embracing digital payment modes, such as UPI, like never before. The report reveals that digital payments account for a significant 69% of the total transaction volumes for the surveyed Indian merchants. Even street vendors, including paan shops, fruit and flower sellers, food stalls, and kirana stores, reported receiving 46% of their payments digitally.

All said and done, India is swiftly moving towards becoming a cashless economy. Convenience, speed, and rewards stand out as primary drivers fueling the adoption of digital payments. However, concerns about security, internet connectivity, and fraudulent transactions remain. Addressing these challenges effectively is crucial to further accelerate the shift towards digital transactions across the nation.

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