India's digital payments are likely to double to $7 trillion by 2030 from current levels, according to a joint study by Kearney and Amazon Pay titled 'How Urban India Pays'.

Unified Payments Interface (UPI) payments and digital transactions have seen a growth of 138 per cent from the financial year 2018 to 2024. UPI is developed by the National Payments Corporation of India (NPCI).

India's digital payments for retail transactions increased to $3.6 trillion in FY 2023-24 compared to $300 billion in FY 2017-18, according to the joint study. UPI transactions were first introduced in India on April 11, 2016.

According to the report, India's e-commerce market is expected to be worth $75 billion to $80 billion in 2022 and grow by 21 per cent by 2030. In India, cards and digital wallet transactions account for about 10 per cent of the digital transaction value.

According to the report, India's digital transactions will account for 46% of the world's total digital payment volumes in 2022.

Digital payments in India

In India, more than 6,000 people living across 120 cities in the country stated in an online survey that they prefer making digital payments over other methods to purchase goods and services online. According to the report, the rich use digital payment methods for more than 80 percent of their total transactions.

As many as 1,000 merchants sampled for the survey said that 69 per cent of transactions are made through digital payments. The report highlighted that businesses ranging from roadside paan shops to fruit sellers, eateries and kirana stores are switching to digital payments instead of cash. Along with this, it also leads to threats such as cyber security cases of financial crimes, limited coverage, and mutual trust.

According to the report, Millennials and Gen X are leading in the adoption of all types of digital payment devices. 72% of all transactions are digital.

The future of digital payments in India

The report states that the future of India's digital payments journey will focus on low-income groups of consumers and small-town coverage.

Small towns in India are still lagging behind big cities in terms of digital payments. In small cities, 65 per cent of the users are using digital mode, while in big cities, 75 per cent of the users are using digital mode.

Tier 2 cities such as Lucknow, Patna, Bhopal, Jaipur, Bhubaneswar, Indore, Ahmedabad and Pune are relatively closer to the metros in terms of digital payment exposure despite having a lower retail market potential compared to the top six metro cities such as Mumbai, Kolkata, Chennai, Bengaluru, Hyderabad and Delhi.