Digital payments are the preferred payment option for 42 percent of consumers in India, leading card payments (29%) and cash (27%). While preference for digital payments – including eWallet and UPI payments – is more pronounced with younger consumers (42% for Gen Z and 48% for Millennials), the survey revealed a more consistent picture across age groups in terms of adoption. 77 percent of Millennials had used digital payments at least once during the festival season, compared to 72 percent of Gen Z and 69 percent of Gen X. Nearly half (45%) of Baby Boomers also indicated they had used digitals payments within the survey period. Interestingly, for nearly one in three respondents, festival season spending has become a largely cashless affair, with 32 percent of those surveyed having not used cash for festival season purchases.
“Digital payments, including UPI and other eWallets, are increasingly the payment method of choice across a wide spectrum of consumers in India,” said Kaushik Roy, vice president & country leader – South Asia, ACI Worldwide. “While there is still a perception that UPI, for example, is primarily for the peer-to-peer channel, this study shows that significant inroads are being made in the merchant payments channel. With monthly transactions on the UPI platform nearing one billion, and credit and debit card usage at the POS experiencing double-digit annual growth, digital and card payments will continue to make inroads into the cash economy.”
44 percent of respondents used digital payment methods for low-value payment (less than 1,000 INR) via a merchant website (eCommerce) or app (P2M), indicative of the progress made by digital payments in the merchant channel. Meanwhile, peer-to-peer (P2P) payments have been made by 36 percent of respondents for low-value payments (less than 1,000 INR) and 37 percent for high-value payments (more than 1,000 INR) during the festival season.
Given the well-documented recent growth in digital payments – in particular, UPI – it is unsurprising that 43 percent of respondents used digital payment methods regularly (at least 2-3 times a week) during the festival period, with 15 percent purchasing this way at least once per day.
Queried about what would encourage consumers to use digital payments more frequently, 42 percent said that they wanted better rewards (discounts, incentives or cashbacks), followed by 24 percent who saw faster and more frictionless checkout (more convenient than cash or card payment) as the key motivating factor.
While internet connectivity remains a key challenge for increased adoption of digital payments (a top concern for 44 percent of those surveyed), it is one that will inevitably improve with network infrastructure upgrades; however, banks, fintechs and merchants should be aware that 40 percent also see data privacy as a top area of concern when it comes to digital payments. Other top concerns include failed transactions (36%), problems processing refunds (32%) and fraud (29%).
On the positive side, only 21 percent of respondents cited lack of clarity about fees as a major concern and 23 percent lack of acceptance infrastructure at merchants, while just 15 percent found digital payments inconvenient compared to physical cards or cash, signalling an increasing ease of use for customers and familiarity with digital payment methods.
As per data released by NPCI, UPI transactions hit an all-time high of 955.02 million in September 2019 as compared to 918.35 million in August. There has been a 135 percent YoY increase in the number of transactions and UPI is soon expected to cross one billion monthly transactions.