Money & Banking

'Despite privacy concerns, consumers big on digital payments this festival season'

Our Bureau Mumbai | Updated on October 23, 2019 Published on October 23, 2019

According to a study, 43 per cent of respondents used digital payment methods regularly - at least two-three times each week - during the festival period.

UPI transactions hit an all-time high of 955.02 million in September 2019

Digital payments are the preferred payment option for 42 per cent of consumers in India this festive season, with only one in 10 respondents claiming to have not made a digital payment in the period leading up to Diwali, according to an online study spanning 1,025 people, conducted by YouGov and ACI Worldwide, a global provider of real-time electronic payment and banking solutions.

However, 40 per cent of those surveyed considered data privacy a top area of concern when it comes to digital payments, the study cautioned.

Forty-three per cent of respondents used digital payment methods regularly - at least two-three times each week - during the festival period, with 15 per cent purchasing this way once or more per day. The study found that 32 per cent had not used cash for festival season purchases, indicating that for some, festival season spending is becoming a largely cashless affair.

New high for UPI transactions

According to data released by NPCI, UPI transactions hit an all-time high of 955.02 million in September 2019, compared to 918.35 million in August. “There has been a 135 per cent YoY increase in the number of transactions and UPI is soon expected to cross one billion monthly transactions,” it added.

“Digital payments, including UPI and other eWallets, are increasingly the payment method of choice across a wide spectrum of consumers in India,” said Kaushik Roy, Vice-President & country leader – South Asia, ACI Worldwide.

The preference for digital payments, including eWallet and UPI payments, is more pronounced among younger consumers, 42 per cent for Gen Z, and 48 per cent for millennials, the survey revealed.

Seventy-seven per cent of millennials had used digital payments at least once during the festival season, compared to 72 per cent of Gen Z and 69 per cent of Gen X. Nearly half (45 per cent) of baby boomers also indicated they had used digital payments within the survey period.

“While there is still a perception that UPI, for example, is primarily for the peer-to-peer channel, this study shows that 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,” added Roy.

Of the overall sample, 44 per cent of respondents used digital payment methods for low-value payment - less than Rs 1,000 - via a merchant website (eCommerce) or app (P2M), indicative of the progress made by digital payments in the merchant channel, the study further stated.

As for consumer concerns and industry opportunities revealed by the study, Internet connectivity, which is a prerequisite for most digital payment methods, is a top concern for 44 per cent, while failed transactions (36 per cent), problems processing refunds (32 per cent) and fraud (29 per cent) were also identified as major concerns.

On what would encourage more frequent usage of digital payments, 42 per cent cited better rewards, including discounts, incentives or cashbacks, while 24 per cent cited faster and more frictionless checkout.

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Published on October 23, 2019
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