NEW DELHI: Digital retail transactions are fast becoming the backbone of everyday spending in India, with UPI, credit cards, and debit cards accounting for a record 74 per cent of retail transactions across the country’s top 29 cities.
As per the 9th edition of NeoGrowth’s NeoInsights report, titled How India Pays, this marks a sharp rise from 45 per cent two years ago.
Out of every Rs 100 spent in retail in these cities, Rs 74 is now paid digitally, a behavioural shift driven by convenience, speed, and trust in technology, the report highlighted.
The findings come as India’s digital economy is projected to contribute nearly one-fifth of national income by 2029–30, underscoring digital inclusion as a cornerstone of growth.
The study, which analysed the banking behaviour of over 21,000 MSME retail outlets across 29 cities with an estimated annual revenue of Rs 35,000 crore, noted that India’s digital retail transactions touched nearly Rs 98 lakh crore in FY25, recording a 23 per cent year-on-year growth.
“Digital payments in India have moved on from being an urban privilege to becoming a national standard,” said Arun Nayyar, MD & CEO, NeoGrowth. “From kiranas to kiosks, retailers are redefining adoption and efficiency in digital transactions. This transformation is laying the foundation for wider credit access and a more formalised economy.”
The shift is visible across everyday categories from personal grooming (83 per cent) and vehicle maintenance (80 per cent) to groceries (68 per cent) and fuel (63 per cent).
Metro cities continue to lead adoption, with Hyderabad (82 per cent), Bengaluru (79 per cent), and Pune (79 per cent) at the forefront. Among non-metros, Visakhapatnam (76 per cent), Nagpur (71 per cent), and Chandigarh (68 per cent) stand out.
However, cities such as Ahmedabad (60 per cent), Kolkata (55 per cent), Jamshedpur (54 per cent), Madurai (52 per cent), and Rajkot (48 per cent) still lean more on cash, not due to access issues, but consumer behaviour and preference for familiar payment methods.
The report highlights that younger entrepreneurs, particularly in their 20s and 30s, generate nearly 80 per cent of revenues via digital channels. Older retailers are catching up too, with digital adoption in their outlets climbing from 40 per cent to 68 per cent in just two years.
Interestingly, smaller businesses (with turnover below Rs 1 crore) are leading digital adoption at 79 per cent, compared with 63 per cent among larger businesses with turnover above Rs 5 crore. Early-stage retailers are also embedding digital payments from the start, reflecting a “digital-first” mindset.
India’s digital push is being bolstered by government measures such as the Rs 1,500 crore UPI incentive scheme under the Zero MDR policy, the JAM trinity (Jandhan, Aadhaar, Mobile), and the expansion of BharatNet. Coupled with rising smartphone penetration and app-based payment ease, digital transactions are becoming second nature nationwide.
Zero MDR (Merchant Discount Rate) Policy refers to the government’s directive that payment service providers cannot charge merchants any fee (MDR) on transactions made through certain digital payment methods, such as UPI and RuPay debit cards.
Agencies