In the report ‘How Urban India Pays’, Kearney-Amazon Pay said strong adoption of digital payments in online purchases has potentially led to a permanent shift in consumer behaviours
India is set to witness a doubling of retail digital payments to 7 trillion USD by 2030, driven by rapid digital adoption, according to the ‘Voice of the Consumer Survey 2024’ by Kearney and Amazon Pay, reported PTI.
The report, titled ‘How Urban India Pays,’ is based on insights from over 20,000 consumers across 31 countries, including 1,000 in India. It highlights a significant shift in consumer behaviour towards digital payments, with 75 per cent of Indian consumers expecting increased spending on clothing and footwear, followed by groceries at 74 per cent. Moreover, 56 per cent of respondents frequently use digital payments in physical stores.
The survey shows affluent consumers leading the way, using digital payments for 80 per cent of their transactions. Millennials and Gen X are also at the forefront of this adoption, with both men and women using digital payments in about 72 per cent of their transactions, indicating gender parity.
Conducted with over 6,000 consumers and 1,000 merchants across 120 cities, the research reveals that e-commerce in India, valued at 75-80 billion USD in 2022, is expected to grow at a 21 per cent CAGR until 2030. Retail digital payments have surged from 300 billion USD in FY18 to 3.6 trillion USD in FY24, with projections to double by FY30.
The Unified Payments Interface (UPI) has been a key driver, showing a CAGR of 138 per cent in volumes from FY18-24. Other digital instruments, like cards and digital wallets, contribute 10 per cent of digital transaction value today. India accounted for 46 per cent of global digital transaction volumes in 2022, according to the report.
Digital payments have also penetrated smaller towns, with 65 per cent of transactions in these areas being digital, compared to 75 per cent in larger cities. The Kearney India Retail Index shows a strong correlation between a city’s average Degree of Digital Payment Usage (DDPU) and its retail potential. Some cities like Lucknow, Patna and Bhopal exhibit high DDPU despite lower retail potential compared to top metros.
Emerging payment methods such as co-branded credit cards, buy now, pay later (BNPL), wearable payments and voice assistant-based payments are gaining traction. Around 69 per cent of transaction volumes for surveyed Indian merchants are now digital, with even street vendors adopting digital payments.
However, challenges remain, including fraud, limited connectivity and trust issues. The report suggests that increasing digital payment penetration in lower DDPU segments and enhancing value for higher DDPU segments can drive further growth. Key stakeholders, including payment providers, the government and value-added service players, must collaborate to expand digital payment adoption.
Focus areas include financial education, user-friendly consumer journeys, improved digital infrastructure, fraud risk minimisation and expanding access to credit-based payment methods. These efforts can foster a more inclusive, secure and user-friendly digital payment environment in India, enhancing adoption among consumers and merchants.
