According to a new survey, more than 40% of consumers in Tier 3 to 6 cities utilize digital payment on a daily basis, with another 45% using it once every two days. "This reflects the frequent usage of digital payments by consumers, even in Tier 3 to 6 locations of the country," according to a Chase India research on The State of Digital Payments in India.

The paper analyzes the primary problems that merchants and consumers experience while adopting digital payment services at the grassroots level. Nearly half of the retailers in rural India who do not accept digital payments are reportedly unaware of the service.

On the other hand, a startling 94% of consumers who do not use digital payments are aware of it but choose not to use it due to a variety of reasons, including poor internet connectivity, ignorance, skepticism of online payments, and troubles with services. According to the report, approximately 74% of consumers stated they were using digital payment systems to complete a purchase that a family member had completed.

Furthermore, as per the research, over 15% of retailers stated they received more than 50% of their sales through digital payments, while roughly 41% of merchants stated they received less than 25% of their sales through these means. "This shows the potential left to be tapped with respect to increasing the usage of digital payments at the grassroots level," the research stated.

For the purpose of the report, a total of 2,240 respondents—1,184 customers and 1,056 merchants—were polled. These respondents were dispersed among 16 districts, which covered eight states in various geographic regions of the nation. One important finding of the report was that people were not aware of digital payments. Because they were ignorant of digital payments, almost 46% of merchants had never used them.

According to the poll, approximately 36% of retailers stated that they conduct more than 50 digital payment transactions per month on average. Furthermore, about 23% of retailers stated that they conduct no more than one digital payment transaction on a daily basis.

The majority of retailers handle monthly digital payment transactions totaling less than Rs 15,000. A small number of vendors asserted to handle electronic payments above one lakh rupees. It stated that the primary obstacles to the widespread use of digital payments include poor infrastructure, problems with services, capacity limits, and a lack of confidence in these payment methods.

"A crucial phase in preparing merchants to use digital payment services is Know Your Customer (KYC). However, the survey found that, among other reasons, capacity issues, the length of time it took for onboarding, and a lack of necessary documentation prevented nearly one in three merchants from successfully completing the KYC process” the research stated.