Mumbai: Digital retail payments have firmly established themselves as the preferred mode of transaction across India’s urban centres, according to NeoGrowth’s latest NeoInsights study titled How India Pays.
The report reveals that digital transactions – spanning UPI, credit cards, and debit cards – now account for 74% of retail spends across the top 29 Indian cities, a steep rise from 45% just two years ago.
This means out of every ₹100 spent on retail, ₹74 is paid digitally, marking a profound behavioural shift in how India pays.
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City-Wise Trends Highlight How India Pays
The How India Pays report highlights strong adoption in cities such as Hyderabad (82%), Bengaluru (79%), and Pune (79%), which lead in digital payments usage among metros. Beyond the major cities, Visakhapatnam (76%), Nagpur (71%), and Chandigarh (68%) dominate digital adoption.
In contrast, Ahmedabad (60%), Kolkata (55%), Jamshedpur (54%), Madurai (52%), and Rajkot (48%) show comparatively lower reliance on digital modes, pointing to diverse payment behaviours across India.
Category-Wise Adoption Reinforces How India Pays
Digital transactions have become ingrained in everyday categories. Personal grooming (83%), education (81%), and dining (80%) top the adoption charts, while groceries (68%) and fuel (63%) are fast catching up.
Younger Retailers Leading the Shift in How India Pays
The study finds that younger entrepreneurs in their 20s and 30s are driving the digital surge, with nearly 80% of their revenues coming from digital modes. Seasoned retailers aged 50 and above are catching up quickly, increasing their digital adoption to 68%, up from 40% two years ago.
Small Businesses Ahead in Digital Transition
Contrary to assumptions, smaller businesses with turnover below ₹1 crore are leading adoption, with 79% of transactions digital, outpacing larger businesses with turnovers above ₹5 crore, who stand at 63%. Early-stage businesses (less than three years old) are also integrating digital payments from inception, reinforcing the structural shift in how India pays.
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Policy Support Driving How India Pays
Government initiatives such as the ₹1,500 crore UPI incentive scheme, the Zero MDR policy, the JAM trinity, and BharatNet expansion have played a critical role in accelerating adoption. These policy moves, combined with smartphone penetration and the ease of app-based payments, have made digital transactions mainstream.
Arun Nayyar, Managing Director & CEO of NeoGrowth, commented: “Digital payments in India have moved from being an urban privilege to becoming a national standard. What we are witnessing is a behavioural transformation powered by technology. From kiranas to kiosks, retailers are not only adopting digital payments but also creating digital trails that enhance formalisation and credit access.”
Outlook
The How India Pays report emphasizes that India’s digital economy is projected to contribute nearly one-fifth of national income by 2030, surpassing traditional sectors like agriculture and manufacturing.
The study underlines that this transformation is not just urban-led but increasingly Bharat-driven, youth-powered, and retailer-enabled, shaping the future of India’s digital economy.
