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Most retailers prefer UPI over other payment methods; 70% of retailers prefer UPI for digital transactions. (Representational image)
7 out of 10 retailers believe that over 50% of their sales will be done through UPI in the next three years.
70% of Ministry of Micro, Small and Medium Enterprises (MSMEs) believe that more than half of their retail sales will be through UPI, found NeoInsights study titled ‘Decoding Digital Payments: A Retailer Perspective’, released recently by MSME-focused NeoGrowth. Digital Lender in India.
The study was based on an extensive evaluation of NeoGrowth’s customer data set of ~3000 retailers along with a survey of ~1000 retailers across the country. The study covered the digital payment adoption behavior of Indian retailers across 25+ cities and 70+ industry sectors.
Key Findings of the Report
UPI Payments is set to rule the digital payments landscape in India
Customers prefer to shop using digital payment methods and are more likely to shop from retailers that offer this option. 7 out of 10 retailers believe that over 50% of their sales will be done through UPI in the next three years.
The study indicates that retailers are also increasingly favoring digital transactions, with UPI being their preferred method due to the convenience it provides to customers and the speed of payment receipt for retailers.
UPI adoption on the rise as more Indian retailers adopt digital payments
Retailers in Bengaluru saw a 14% increase in the share of UPI among their digital transactions, followed by Chennai and Hyderabad with a 13% increase compared to pre-COVID levels. Smaller cities saw an increase of only 4%.
The FMCG and Retail segment saw a 14% growth in UPI transactions, followed by Food & Beverages at 12% and Fashion & Lifestyle at 9%, attributed to retailers’ ability to easily accept digital payments and their An increase in the level of comfort can be given. Customers are doing digital transactions.
Card payment ratio declines as UPI transactions end
As per the report, card transactions have seen a decrease of around 12% across industry sectors and around 16% across various locations. Industry sectors such as fashion and lifestyle have taken a hit following the pandemic. The decline is most pronounced in big cities like Chennai, which were among the top card users. The trend of consumers adopting contactless payment methods, which gained momentum during the pandemic, has been a significant contributor to this decline in card usage.
Most retailers prefer UPI over other payment methods; 70% of retailers prefer UPI for digital transactions.
Digital payment adoption continues to accelerate with speed and ease
Instant receipt of payments and convenience for customers were the top motivators for retailers to use digital payments.
More than 50% of retailers said that by adopting digital payment modes, they have seen an increase in their sales and a better shopping experience for the customer. Around 40% of retailers also said that digital payments have helped them attract new consumers.
Improved creditworthiness through broad-based use of digital transactions by retailers
Digital payments have enabled new-age digital lenders to access digital transaction history of retailers to determine their creditworthiness. An encouraging sign is that around 40% of retailers now prefer to use digital payments to repay their loans.
Digital payments continue to flourish despite infrastructural challenges
The major barrier faced by more than half the retailers was failed transactions, followed by high machine costs and online fraud concerns. Necessary regulatory and infrastructural thrust has to be given to address these challenges to promote digital transactions among retailers.
Arun Nayyar, MD & CEO, NeoGrowth, said, “Digital payments are seeing remarkable adoption among retailers in India. MSME retailers are increasingly reaping the benefits of using digital payments in their business, driven by ease of use and customer convenience. Recognizing from.”
“UPI is leading the adoption of digital payments among retailers by ticking all the right boxes. Digital payments are a powerful means of providing credit to underserved and underserved retailers. We are confident that the Indian retail landscape is well positioned for a bright and prosperous future,” said Nayyar.