Survey Reveals Growing Digital Payment Adoption in Tier 3 to 6 Cities, but Challenges Persist
A recent survey conducted by Chase India on The State of Digital Payments in India highlights a significant rise in the usage of digital payment methods among consumers in Tier 3 to 6 cities. The study shows that over 40% of consumers in these regions use digital payments daily, with an additional 45% utilizing them every two days.
The report underscores the frequent use of digital payment methods across various regions, including smaller cities and towns, reflecting a shift towards more widespread digital transaction practices.
Despite this positive trend, the survey reveals notable challenges in the adoption of digital payment services, particularly at the grassroots level. Key findings include:
- Merchant Awareness: Nearly 50% of merchants in rural areas who do not use digital payments are unaware of these services. In contrast, 94% of non-users among consumers are aware of digital payments but do not engage with them due to issues such as inadequate internet connectivity, limited knowledge, mistrust, and service-related problems.
- Consumer Utilization: About 74% of consumers reported using digital payment services for transactions made by family members, indicating a broader acceptance of digital payments within household transactions.
- Merchant Usage: The survey notes that around 41% of merchants receive less than 25% of their sales through digital payments, while 15% of merchants report that over 50% of their sales are processed digitally. This disparity highlights the untapped potential for increasing digital payment adoption at the grassroots level.
- Challenges and Infrastructure: The report identifies several obstacles hindering the growth of digital payments, including inadequate infrastructure, service-related issues, capacity constraints, and a general lack of trust in digital transactions. Notably, around 46% of merchants who have never used digital payments cited a lack of awareness as the primary barrier.
- KYC Difficulties: The survey found that nearly one-third of merchants faced challenges in completing the Know Your Customer (KYC) process due to insufficient documentation, capacity constraints, and prolonged onboarding procedures.
The survey, which included 2,240 respondents—comprising 1,184 consumers and 1,056 merchants across 16 districts in eight states—provides a comprehensive overview of the current state of digital payment adoption in India. It reveals that while there is significant progress in digital payment usage, substantial room remains for growth, particularly in enhancing merchant engagement and addressing infrastructure and awareness issues.
The findings emphasize the need for targeted efforts to improve digital payment infrastructure and address the barriers to adoption, ensuring that the benefits of digital transactions are more evenly distributed across all regions of the country.
