A new study by Kearney and Amazon Pay predicts that India’s retail digital payments will double to USD 7 trillion by 2030. This growth is driven by increasing digital adoption across the country. The report, titled ‘How Urban India Pays,’ highlights the significant shift in consumer behavior towards digital payments.
The report is based on an online survey of over 6,000 consumers and 1,000 merchants from 120 cities, covering various regions, income groups, city categories, age brackets, and genders. It found that India’s 90% of respondents prefer digital payments for online purchases, with affluent consumers leading the way. Millennials and Gen X are the most active users of digital payment methods.
Gender Parity and Usage
The survey revealed that men and women use digital payments in about 72% of their transactions, indicating gender parity in digital payment adoption. This shows a balanced growth in digital payment usage across different demographics.
India’s e-commerce market was valued at USD 75-80 billion in 2022 and is expected to grow at a 21% compound annual growth rate (CAGR) until 2030. Retail digital payments have grown significantly over the past five years, from USD 300 billion in FY18 to USD 3.6 trillion in FY24. By FY30, this figure is expected to double to USD 7 trillion.
Role of UPI as Digital Instruments
The Unified Payments Interface (UPI) has been a major driver of this growth, with a CAGR of 138% in its volumes from FY18 to FY24. Other digital payment instruments like cards and digital wallets are also gaining popularity, contributing 10% of the current digital transaction value.
Urban and Rural Adoption
Digital payments have penetrated even small towns, with 65% of transactions being digital in these areas. In larger cities, this ratio is 75%. Cities like Lucknow, Patna, and Bhopal show high digital payment usage, nearly matching that of larger metropolitan cities despite having lower retail potential.
New payment methods such as buy now, pay later (BNPL), wearable payments, and voice assistant-based payments are gaining traction. Digital modes of payment constitute around 69% of total transaction volumes for the Indian merchants surveyed, including street vendors and small businesses.
The report highlights challenges like financial fraud, limited connectivity, and trust issues as barriers to merchant adoption of digital payments. To overcome these, the next wave of growth will focus on increasing penetration in segments with lower digital payment usage and enhancing spending in higher usage segments by addressing these concerns.
Stakeholder Roles and Recommendations
Key stakeholders, including payment providers, the government, and value-added services players, need to work together to expand digital payment adoption. The focus should be on financial education, user-friendly consumer journeys, enhanced digital infrastructure, and minimizing fraud risks.
By encouraging a more inclusive, secure, and user-friendly environment, India can enhance the adoption of digital payments among consumers and merchants, driving significant growth in the retail digital payment ecosystem. This will help India maintain its position as a global leader in digital payments.
