Indian Economy News

UPI a big hit with retailers: NeoGrowth’s Digital Payments

According to a study conducted by digital lender NeoGrowth, UPI has emerged as the most favoured method for consumers to make payments at retail stores.

Almost 70% of retailers expect that more than 50% of in-store transactions will take place via UPI. The paper 'Decoding Digital Payments: A Retailer Perspective' is based on consumer data from over 3,000 retailers as well as a survey of 1,000 retailers throughout India.

While UPI usage is increasing, card transactions are down by roughly 12% across all industry segments. The decreased trend can be linked mostly to an increase in the adoption of contactless payment methods, a trend that gained traction during the pandemic. The reduction is more noticeable in larger cities like Chennai, which were formerly among the top card users.

"MSME retailers are increasingly recognising the value of accepting digital payments in their businesses, driven by ease of use and customer convenience."

According to Managing Director and CEO of NeoGrowth, Mr. Arun Nayyar “UPI is spearheading the adoption of digital payments among Retailers by ticking all the right boxes.”

It's interesting to note that larger cities tend to use UPI more so than smaller ones. According to retailers, the share of UPI in their digital transactions increased by 14% in Bengaluru, 13% in Chennai, and 13% in Hyderabad as compared to pre-COVID levels. Only a 4% increase was observed in smaller cities.

The FMCG and retail segments had a 14% growth in UPI transactions, followed by Food & Beverage at 12% and Fashion & Lifestyle at 9%.

The most significant barriers to merchant acceptance of digital payments are failed transactions, followed by the expensive cost of machinery and fears about cyber fraud.

According to the National Payments Corporation of India (NPIC), the country has processed 8.8 billion UPI transactions by April 2023. India has the biggest number of online transactions, with UPI-based payments accounting for most of them.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.