Digital payments in India have been crossing record transactions in the last few months.
According to recent data from RBI, NPCI, and banks, digital transactions have jumped from 20.7 billion in FY 2017-18 to 88.4 billion in FY 2021-22.
March 2023 saw UPI transactions clocking the highest-ever number of transactions at 8.7 billion, making it the leading mode of digital payments at Rs 14.05 Lakh crore in value.
More than 50 per cent retailers believe digital payments allow them to grow their business. According to NeoInsights’s report, 90 per cent retailers pay their vendors digitally and 7 out of 10 retailers feel over half of their sales will be via UPI.
The report covered 4000 retailers from more than 25 cities in 9 different segments including auto, consumer durable & electronics, food & beverage, fashion & lifestyle, FMCG & retail, infrastructure, services, healthcare and other.
As per the study, between 2019 and 2022, the value of digital transactions had increased by 14 per cent for Bengaluru and 13 per cent for Chennai and Hyderabad. Whereas, other smaller cities only saw a 4 per cent increase. On the other hand, metro cities like Delhi, Mumbai and Pune maintained their pre-covid levels.
The FMCG & retail segment reported a 14 per cent increase in UPI transactions, followed by food & beverage and fashion & lifestyle at 12 per cent and 9 per cent respectively.
The report suggests that the card transactions took a backseat as it have decreased by 12 per cent across industry segments and 16 per cent across locations. Only 30 per cent of retailers have preferred card payments.
More than 70 per cent retailers said that they have been using some or the other form of digital payments before March 2020, but picked up pace in 2021 only post the COVID-induced social distancing, the report said.
However, instant receipt and customer convenience remain the top drivers today, it added.
As per the customer convenience, almost 80 per cent retailers said they use digital payments to receive payments from customers. For a business owner, digital transactions provide a clear trail that makes accounting simple and streamlines operations and tax compliance.
As a result, almost 40 per cent retailers prefer using digital payments for loan repayment and only 7 per cent use it for other purposes such as tax and bill payments.
According to the report, the most common reason for non-adoption is lack of knowledge, and a significant number of retailers also claim fear of being cheated as a demotivator. Making sure that the relevant information is being given to retailers about digital payments and security may help overcome this challenge.
“In addition to this, we saw that retailers from Pune are most worried about frauds whereas the retailers from Delhi struggle with usage,” the report said.
Therefore, promoting adoption among retailers requires lowering costs, enhancing benefits, and a continuous flow of information around digital payment. All of this can be achieved with proper awareness campaigns, it added.