India’s digital payments landscape is experiencing a meteoric rise, driven by a surge in consumer adoption and technological advancements. A recent study conducted by Kearney in collaboration with Amazon Pay predicts that retail digital payments will reach a staggering $7 trillion by 2030, doubling from current levels.
The report, titled “How Urban India Pays,” underscores the profound shift in consumer behavior towards digital transactions. Urban Indians are increasingly embracing digital payments across various demographic segments, with 90% of respondents preferring them for online purchases. Affluent consumers are leading the charge, utilizing digital payment methods for 80% of their transactions. Millennials and Generation X are the primary adopters of diverse digital payment instruments, while gender parity is evident in digital payment usage. The research, based on an extensive survey of over 6,000 consumers and 1,000 merchants, reveals a widespread adoption of digital payments across different regions, income groups, city categories, age brackets, and genders.
India’s e-commerce sector, valued between $75 billion and $80 billion in 2022, is projected to grow at a compound annual growth rate (CAGR) of 21% until 2030. This growth is mirrored in the retail digital payments sector, which has witnessed a dramatic increase from $300 billion in FY18 to $3.6 trillion in FY24. The report forecasts this figure to reach $7 trillion by FY30. The Unified Payments Interface (UPI) has been a key catalyst for this growth, with a remarkable CAGR of 138% in transaction volumes from FY18 to FY24. Other digital payment instruments, such as cards and digital wallets, are also gaining traction.
India’s leadership in the global digital payment arena is undeniable, accounting for 46% of global digital transaction volumes in 2022. This growth is not confined to metropolitan areas; digital payments have also permeated small towns, where 65% of transactions are conducted digitally. The study by Kearney and Amazon Pay highlights the transformative impact of digital payments on India’s economy. The findings suggest that India’s digital journey will significantly shape its financial landscape in the coming decade, solidifying its position as a global frontrunner in digital payments.
