Retailers Embrace UPI for Transactions: NeoGrowth Study Uncovers Digital Payments Trend

UPI Preferred by Consumers and Retailers for In-Store Payments

Unified Payments Interface UPI has emerged as the most preferred mode for consumers to make payments at retail outlets, according to a recent study conducted by NeoGrowth. The study, titled "Decoding Digital Payments: A Retailer Perspective," is based on customer data from over 3,000 retailers and a survey of 1,000 retailers across India. The findings indicate that nearly 70% of retailers anticipate that UPI transactions will account for more than 50% of purchases made at their stores.

Contactless Payments Drive the Decline in Card Transactions

The study highlights a decline of approximately 12% in card transactions across all industry segments. This downward trajectory can be primarily attributed to the rise in the adoption of contactless payment methods, which gained momentum during the pandemic. The drop in card transactions is most pronounced in larger cities like Chennai, which were among the top users of cards.

UPI Adoption Higher in Metros and Specific Retail Segments

Interestingly, the study reveals that the uptake of UPI is higher in metro cities compared to smaller cities. Retailers in Bengaluru witnessed a 14% increase in the share of UPI transactions among their digital payments, followed by Chennai and Hyderabad at 13% each compared to pre-COVID levels. Smaller cities experienced only a four percent increase. The FMCG and retail segment witnessed a 14% increase in UPI transactions, followed by Food & Beverage at 12% and Fashion & Lifestyle at 9%.

Impediments to Digital Payment Adoption by Retailers

The study identifies the major impediments in the adoption of digital payments by retailers. Failed transactions, followed by the high cost of machinery and concerns regarding cyber fraud, are the primary challenges faced by retailers in embracing digital payments.

Latest Figures: India Sets Record with 8.8 Billion UPI Transactions in April 2023

According to the National Payments Corporation of India, India recorded a staggering 8.8 billion UPI transactions in April 2023. This reinforces India's position as the global leader in online transactions, with UPI-based payments comprising a significant portion of the total.

ThinkWithNiche News' conclusion

The study conducted by NeoGrowth highlights the increasing popularity of Unified Payments Interface UPI as the preferred payment mode for consumers at retail outlets. With nearly 70% of retailers expecting UPI transactions to account for over half of their purchases, it is evident that UPI has gained significant traction in the retail sector.

The rise of UPI has coincided with a decline in card transactions, which can be attributed to the growing acceptance of contactless payment methods. This trend, accelerated by the pandemic, has led to a decrease of around 12% in card transactions across various industry segments. Larger cities like Chennai, which were once prominent card users, have experienced the most significant drop.

The study also reveals that the adoption of UPI is higher in metro cities compared to smaller cities. Bengaluru, Chennai, and Hyderabad have witnessed notable increases in the share of UPI transactions among digital payments. Specific retail segments, such as FMCG and retail, Food & Beverage, and Fashion & Lifestyle, have also seen substantial growth in UPI usage, indicating the ease of accepting digital payments and the growing comfort of customers in conducting transactions digitally.

However, retailers still face challenges in fully embracing digital payments. Failed transactions, the cost of machinery, and concerns about cyber fraud are the major obstacles that need to be addressed to encourage wider adoption among retailers.

India's achievement of crossing 8.8 billion UPI transactions in April 2023, as reported by the National Payments Corporation of India, reinforces the country's position as a global leader in online transactions, with UPI-based payments playing a significant role.

Overall, the study emphasizes the increasing importance of UPI in the retail sector and the shift towards digital payments. Retailers are recognizing the benefits of UPI in terms of ease of use and customer convenience, while consumers are increasingly embracing the convenience and security offered by UPI transactions.

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