A recent survey report has revealed that digital payment usage is becoming increasingly common in India's smaller cities. Over 40% of consumers in Tier 3 to Tier 6 cities use digital payments daily, with an additional 45% utilizing them every two days. This trend highlights the growing reliance on digital transactions, even in more remote areas.
Despite the rise in usage, the report identifies several challenges that both merchants and consumers face when adopting digital payment services at the grassroots level. One of the significant obstacles is the lack of awareness among rural merchants. Nearly half of the merchants who are not using digital payments remain unaware of the service's availability.
Consumer Awareness vs. Usage
Interestingly, while 94% of non-users among consumers are aware of digital payment options, they still refrain from using them. The reasons for this reluctance include poor internet connectivity, limited knowledge about the services, mistrust in online transactions, and service-related issues.
The survey found that around 74% of consumers use digital payment services for transactions made by a family member. Among merchants, about 41% reported receiving less than 25% of their sales through digital payments. On the other hand, 15% of merchants stated that over 50% of their sales come from digital transactions. This data suggests a significant potential for increasing digital payment adoption at the grassroots level.
Survey Demographics
The report is based on a survey of 2,240 respondents, including 1,184 consumers and 1,056 merchants, across 16 districts in eight states. The survey aimed to provide a comprehensive overview of digital payment adoption across various geographic zones in India.
The lack of awareness among merchants remains a critical barrier to the widespread adoption of digital payments. Approximately 46% of merchants had never used digital payments simply because they were unaware of the option.
Transaction Volumes
The survey also revealed that, on average, 36% of merchants process over 50 digital payment transactions each month. However, 23% of merchants reported processing only one digital payment transaction every other day. Most merchants handle digital payment transactions of less than ₹15,000 per month, with only a few processing amounts exceeding ₹1 lakh.
Challenges in Onboarding
The report highlights several hurdles in onboarding merchants for digital payment services. One in three merchants faced difficulties in completing the KYC (Know Your Customer) process, primarily due to a lack of required documents, capacity constraints, and the time-consuming nature of the onboarding process. These challenges further hinder the adoption of digital payments among merchants.
Inputs by PTI
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