Indian Consumers Prefer Digital Payments Over Cash this Festival Season, Embracing UPI and Digital Wallets for Merchant Spending
Growing strength of digital payments in merchant payments channel, increasing ubiquity driven by younger consumers, according to new study by
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 digital payments within the survey period.
“Digital payments, including UPI and other eWallets, are increasingly the payment method of choice across a wide spectrum of consumers in India,” said
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. However, banks, fintechs and merchants should be aware that 40 percent of those surveyed consider data privacy as a top area of concern when it comes to digital payments.
Other key findings and trends:
Payment behaviors and spending patterns
- 43 percent of respondents used digital payment methods regularly (at least 2-3 times per week) during the festival period, with 15 percent purchasing this way once or more per day.
- 32 percent have not used cash for festival season purchases, indicating that for some, festival season spending is becoming a largely cashless affair.
- Only one in ten respondents (10%) claimed to have not made a digital payment method at all in the period leading up to Diwali.
- Peer-to-peer (P2P) payments were 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.
Consumer concerns and industry opportunities
- Internet connectivity (a prerequisite to most digital payment methods) is a top concern for 44 percent, while failed transactions (36%), problems processing refunds (32%) and fraud (29%) also identified as major concerns.
- Only 21 percent of respondents cited lack of clarity about fees as a top concern and 23 percent lack of acceptance infrastructure at merchants, reflecting increasing ease of use for customers and greater merchant acceptance.
- Queried about what would encourage more frequent usage of digital payments, 42 percent said better rewards (discounts, incentives or cashbacks); 24 percent cited faster and more frictionless checkout.
As per data released by NPCI, UPI transactions hit an all-time high of 955.02 million in
All figures, unless otherwise stated, are from
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