UPI, digital wallets gain traction, making up 69% of merchant transactions: Report

UPI, digital wallets and cards are gaining traction in India, account for 69% of merchant transactions across the country

Updated - July 10, 2024 04:20 pm IST

Published - July 10, 2024 02:41 pm IST

UPI, digital wallets and cards are gaining traction in India, account for 69% of merchant transactions.

UPI, digital wallets and cards are gaining traction in India, account for 69% of merchant transactions. | Photo Credit: Reuters

UPI, digital wallets and cards are making up 69% of merchant transactions, according to a consumer survey by Kearney and Amazon Pay.

The impact of digital modes has had an effect on on how street vendors received money as roughly 46% of this pool received online payment. And about 63% merchants accept digital payments for transactions under ₹1,000.

But physical cash is still giving a good fight as nearly 50% of the survey respondents preferred making offline payment. And 62% of the merchants in the East-Northeast cite unreliable internet as a concern.

In the southern states, only 36% customers preferred making UPI payment, followed by the West and North-Central (35%), Northeast (32%) and East (31%).

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65% consumers in small towns are transacting digitally, while in larger cities cited this ratio is around 75%.

While affluent consumers, those earning over ₹20 lakhs per annum, use digital payments for 80% of the transactions, the aspiring class, those earning less than ₹5 lakh per annum, use is for 67 of the transactions.

UPI and digital wallet are preferred for small transaction sizes (less than ₹1,000) and online purchases, while credit cards are preferred for high value (₹5,000 or more) offline and online purchases.

Around 90% of respondents favour digital payments for online purchases, while nearly half extend this preference to brick-and-mortar stores. More than 60% choose digital payments for both online and offline purchases because of the convenience.

The digital payment is led by millennials (aged 25-43 years) and Gen X (aged 44–59 years). However, Boomers (60 years and above) are also rapidly embracing cards and digital wallets. For transaction values ₹5,000 or more, as many as 26% of respondents in the Boomers segment preferred credit cards.

While UPI reigns supreme with 53% of consumers preferring it for online purchases, digital wallets and cards (credit, debit, and prepaid) are preferred by 30% of consumers.

In offline purchases, cash is still predominant with 25% of consumers preferring UPI and 20% of them preferring digital wallets and cards.

Concerns about double debits and financial frauds are prevalent, with 49% and 51% of respondents worried about these issues, respectively; 51% of respondents also highlighted internet issues as their apprehension.

This study is based on a survey spanning 120 cities and among 6,000 consumers and 1,000 merchants.

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