India is undergoing a remarkable digital transformation, revolutionizing the way people travel, shop, and pay. Over the past five years, retail digital payments have surged from $300 billion in FY18 to an astounding $3.6 trillion in FY24. According to a report titled ‘How Urban India Pays‘ by Kearney in collaboration with Amazon Pay, projections indicate that by FY30, this figure will double to $7 trillion.
The study captures the essence of India’s digital payment landscape. This primary research involved over 6,000 consumers via online surveys and more than 1,000 merchants through both online and offline methods, covering 120 cities. The participants represented diverse regions, income groups, city categories, age brackets, and genders.
Key findings from the research
The study reveals a significant shift towards digital payments, with an impressive 90% of consumers preferring them for online purchases while about 50% favor digital methods for offline transactions.
Among different income groups, those earning above Rs. 2 million annually, demonstrate the highest digital payment usage (DDPU), using these methods for 80% of their transactions. In contrast, those earning less than Rs. 500,000 annually, use digital payments for 67% of their transactions.
Millennials, aged 25 to 43 and Gen X, aged 44 to 59, are leading the way in adopting digital payments. Baby Boomers (ages 60 and above) tend to use cards and digital wallets more frequently than younger groups.
Gender parity is notable in DDPU as both men and women use digital payments for about 72% of their transactions.
The top drivers behind the adoption of digital payments include convenience, speed, and rewards. However, concerns about double debits, financial fraud, and internet connectivity could hinder growth in this sector.
Merchant insights
Digital adoption is on the rise with around 69% of transaction volumes for surveyed merchants being conducted digitally. Notably, even street vendors see a significant shift, reporting 46% of their payments received through digital methods.
However, merchants are encountering challenges similar to those faced by consumers, including such as financial fraud, limited connectivity, and trust concerns in the digital payment ecosystem.