Digital Payments Transform Consumer Behavior in Urban India: Kearney Report

Kearney's report 'How Urban India Pays' reveals a significant shift towards digital payments in both online and offline transactions. With 90% preferring digital for online shopping and substantial adoption among millennials and Gen X, it also highlights widespread usage even among small town merchants.

In a comprehensive report titled 'How Urban India Pays,' Kearney highlights a significant shift in consumer behavior towards digital payments, both online and offline. The report indicates that an overwhelming 90% of consumers prefer digital payments for online shopping, while around 50% use these methods for offline purchases.

The report further reveals that over 85% of respondents favor digital payments for discretionary spending on items like electronics, clothes, and footwear. Millennials and Gen X are leading the charge in adopting digital payment methods, but Baby Boomers are also significant users, particularly of credit cards and digital wallets.

Gender parity is apparent, with both men and women utilizing digital payments in about 72% of their transactions. Convenience was cited as the primary reason by about 60% of the survey participants. Additionally, rewards and incentives play a crucial role, influencing 49% of consumers for online purchases and 34% for offline transactions.

In smaller towns, digital payments account for 65% of transactions, while in larger cities, the ratio rises to 75%. Interestingly, cities like Lucknow, Patna, and Bhopal show high digital payment usage comparable to metro cities. The rise of co-branded credit cards, 'buy now, pay later' schemes, wearable payments, and voice-assisted payments are also making waves, with 87% of respondents aware of these options and 34% having used them.

Digital payment methods now constitute about 69% of total transaction volumes for merchants. Even street vendors, including paan shops and fruit sellers, have embraced these tools, receiving 46% of their payments digitally. Despite this uptake, the report also points to challenges such as financial fraud, connectivity issues, and trust-building among both consumers and merchants.

(With inputs from agencies.)