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Digital payments dominate cash this festive season

Around one in three respondents in this festive season is spending without cash; further, 32% have not used cash for festival season purchases.


Kutappan Nair works in Mumbai. During the Onam festival, he had to go home in Thrissur to attend the festivities. Since he got only a short leave, his primary shopping (the Kerala saree for his mother and mundu for his father) was done online through a leading online portal.

Ditto with Sulagna Bhowmik who works in Delhi. With her reaching Kolkata only on Panchami during the Durga Puja almost all her shopping for herself, her parents and sisters and brothers were done online.

Come to Diwali and Sonakshi wanted to gift her boyfriend a mobile for Dhanteras and her mother a watch. With no time to visit the crowded shops and with portals offering fantastic sales, again digital was the way she went.

Even during Chhaath, Suraj Jha was going home to Bhagalpur after making most of his purchases online.

What all these instances prove is that during this festive season, Indians are prefering to make digital payments over cash for completing their shopping needs. These assumptions are further proved by a survey conducted by ACI Worldwide.

The report reveals that nearly 42% of consumers in India like using digital modes of payment for P2M transactions with 29% dominated by cards and 27% by cash. Furthermore, young populace are choosing e-wallet and UPI accounting for 42% for Gen Z & 48% for millennials. 77% of youngsters report using digital payments at least once during the festival season as compared to 72% of Gen Z and 69% of Gen X, the survey revealed.

No wonder therefore that UPI transactions hit an all-time high of 955.02 million in September 2019 as compared to 918.35 million in August 2019. UPI has seen a growth of 135% and is soon expected to cross one billion monthly transactions.

In keeping with this trend, digital payments, including UPI and other eWallets, are increasingly becoming the payment method of choice across a wide spectrum of consumers in India. Significant inroads are being made in the merchant payments channel. With monthly transactions on the UPI platform nearing one billion, and credit and debit card usage at the POS experiencing double-digit annual growth, digital and card payments will continue to make inroads into the cash economy.

44% of respondents used low value payments (Less than Rs.1000) for P2M payments. The survey adds, UPI as a mode of payment was used at least 2-3 times in a weekby 43% percent of respondents with 15% using UPI to make a purchase at least once a day
42% respondents said, rewards are driving them to adopt digital payments, followed by 24% believed convenience was driving them to opt for digital payments.

44% respondents were concerned with the internet connectivity, 44% see data privacy as a top area of concern under digital payments, a note for banks, FinTechs and merchants. Failed transactions, processing refunds and frauds are some other top concerns for consumers.

On awareness, the survey reveals only 21% of respondents cited lack of clarity about fees as a major concern and 23% lack of acceptance infrastructure at merchants, while just 15 % found digital payments inconvenient compared to physical cards or cash.

Not just the ACI survey other statistics too shows that the digital boom during the festive season was not an aberration. According to KPMG, digital payments in India are witnessing thriving growth with a compound annual growth rate (CAGR) of 12.7 % in the number of non-cash transactions.

QR-code based wallet acceptance points with low setting up costs have been instrumental in driving mass adoption among merchants, thereby increasing convenience for customers as well, creating a virtuous cycle for the ecosystem. According to KPMG, one of the key factors which played a transformational role and democratised mobile payments in India was the role played by wallet players. The ease of payments, ubiquity and convenience were the factors which has led to extensive adoption of wallets.

Here are some interesting insights about India’s adoption of digital payments. All findings in this report are based on transactions held on Razorpay platform.
(AMJ: April-May-June, JAS: July-August-September)

–          Customer demand for Digital Payments has increased by 106% since January 2019

–          UPI recorded a growth of 222% from January – September, 2019

–          The highest adoption of digital payments was seen in the Food and Beverage sector (25%), followed by Financial Services (21%) and Tours and Travel (15%)

–          Digital transactions grew by 383% in one year (April FY’18 – March FY’19)

–          The country’s Silicon Valley, Bangalore, continues to top the list of the most digitised cities, followed by Hyderabad, Delhi, Mumbai, and Pune

–          In JAS, among all the payment modes available, 43.5% consumers preferred to make online payments with cards, 40.4% via UPI and 10.9% through net banking

–          Although the usage of cards saw a growth of 62% from January – September, it saw a decline of 9% from AMJ to JAS

–          Nationally, Google Pay is the most preferred UPI app with a contribution of 62% in JAS, followed by PhonePe with 25%, Paytm with 6% and Bhim with 5%

–          Share of wallets doubled from  0.8% (AMJ) to 1.6% (JAS)


The Reserve Bank of India has forecast an outcome of 50% increase in mobile-based payment transactions as per its ‘2021 vision document’. This shift can be attributed to driving factors such as robust payment infrastructure, evolution of form factors, availability of structured data, shift in consumer behaviour and the government’s vision of transforming India into a cashless economy. Is this trend during the festive season the first trend that RBI’s vision might just prove to be hitting bull’s eye.

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