Sample this: Mumbai Police reportedly registered just 14 cases of pickpocketing in 2023. While underreporting of pickpocketing cases is common, pickpocketing is no longer an easy, lucrative crime. People don’t carry large dollops of cash anymore and bank cards can be swiftly blocked digitally even if they are stolen. Indians across demographics and regions are embracing this cashless revolution like never before: 90% of consumers with internet access prefer digital payment options for online purchases, shows a comprehensive report titled ‘How Urban India Pays’ by Kearney India and Amazon Pay India.

How Urban India Pays graphs
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The study, which surveyed more than 6,000 consumers across age brackets and income groups and over 1,000 merchants in 120 cities, also reveals that 50% of the respondents prefer digital payments even for offline transactions (brick-and-mortar stores).

India’s digital payment revolution is firing on all cylinders, propelled by consumers and merchants alike.
Vikas Bansal
CEO, Amazon Pay India

“How Urban India Pays report is a clarion call, underscoring the urgent need for stakeholders to innovate and collaborate to build an inclusive, secure, and future-proof digital payments ecosystem. With digital transactions penetrating even street vendors and smaller towns, we are at an inflection point,” says Bansal.

Here are more key findings from the study.

Age, gender no bar for digital payments

How Urban India Pays graphs

While Millennials and Gen X are leading digital payments adoption, the previous generations aren't far behind. Boomers are embracing digital wallets and cards at higher rates than some younger cohorts.

After my son moved to Malaysia, I have been living by myself and working at a local tailor shop. I usually manage my finances myself. Initially, I was using a card for payments as it eased my worry about losing cash. But the kids in my neighbourhood taught me how to use UPI.
Fatima Bibi
60-year-old from Rohtak

“Now I use UPI even for petty transactions; it is so much more convenient and I can’t imagine going back to cash,” she says.

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Similarly, both men and women use digital payments in about 72% of transactions, indicating gender parity.

Retail digital payments could touch $7 trillion by 2030

Growing consumption, widespread availability of affordable Internet, the growth of the digital payment ecosystem and digital infrastructure are among the factors that have fuelled the growth of digital payments. In the past five years, retail digital payments have grown from $300 billion in FY 18 to $3.6 trillion in FY 24. This figure is likely to double to $7 trillion by 2030, the study suggests.

How Urban India Pays graphs

Cash is still widely preferred for daily spending categories; usually for values of ₹500 or less. But the volume of cash-based transactions in the country have now trickled down to less than 60% as more consumers and merchants adopt digital payments.

UPI leads, but credit cards still preferred for big purchases

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. Co-branded credit cards, like the Amazon Pay ICICI credit card, are gaining momentum; 46% of survey respondents reported owning at least one co-branded card, driven by their attractive rewards structure.

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Amazon Pay is committed to being at the vanguard of this transformation, empowering Indians across geographies with seamless access to digital payments. We will continue simplifying lives through frictionless digital experiences that fulfill aspirations and uplift communities.
Vikas Bansal
CEO, Amazon Pay India

Small towns are the new frontiers of digital payments

Small towns are emerging as hotbeds of digital payment adoption. Digital payments account for 65% of all transactions in small towns, compared to 75% in larger cities, the Amazon Pay-Kearney study shows. This narrow gap attests to the rapid pace of digitisation beyond metro areas. Interestingly, digital payment penetration surpasses retail potential in some large and mid-size cities, such as Lucknow, Patna, Bhopal, Jaipur, Bhubaneswar, Indore, Ahmedabad, and Pune, which exhibit a high degree of digital payment usage (DDPU).

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DDPU is a metric designed to measure the extent of digital payment adoption among various demographic groups. It uses a multidimensional approach using three foundational pillars, namely volume (digital transaction frequency), variety (diversity of categories for digital payments) and openness (receptiveness towards emerging digital payment methods.

The DDPU of the above-mentioned cities nearly matches that of the larger metropolitan cities, despite having a lower retail potential than the top six metros.

From street to store: Indian merchants’ shift to digital payments

The study points that 46% of transactions for street vendors (paan shops, fruit and flower sellers, food stalls, and kirana stores) are now digital. Digital modes of payment constitute around 69% of the total transaction volumes for the Indian merchants surveyed.

Convenience to competition: why merchants are going digital

Across merchant types, the top reasons for preferring digital payments are convenience, trust, safety, and the ability to track transactions. About 63% of the merchants admitted to accepting digital payments for transactions under ₹1,000 to prevent customers from going to competitors that accept digital payments. Challenges for merchant adoption mirror consumer concerns, highlighting issues of financial fraud, limited connectivity, and trust.

Digital payments will become all-pervasive

As consumers in lower-income groups and smaller towns embrace digitisation, the penetration of digital payment modes will only grow. The Reserve Bank of India's (RBI) Payments Vision 2025 document highlights the core theme of E-Payments for Everyone, Everywhere, Everytime (4 Es), supported by the four pillars of integrity, inclusion, innovation, and institutionalisation.

While consumers value the convenience, efficiency, and rewards that digital payment methods offer, concerns about double debits, financial fraud, and Internet connectivity issues remain.

The Kearney India and Amazon Pay India study emphasises the need for financial education, user-friendly consumer journeys, and improved digital infrastructure by addressing system and network issues. Minimising fraud risks and enhancing advanced security measures are also important.

*Note: All data is from the How Urban India Pays study conducted by Kearney and commissioned by Amazon Pay. The insights are based on responses from 6,000+ consumers and 1,000+ merchant respondents from 120 cities, with significant representation across regions, income groups, city categories, age brackets, and gender.