Did you know: More than half the shops in Indian cities don't accept digital payments

Did you know: More than half the shops in Indian cities don't accept digital payments
An advertisement of Paytm is pictured at a road side stall in Kolkata, January 25, 2017. REUTERS/Rupak De Chowdhuri/File PhotoReuters
  • Only 48% of urban merchants accept digital payments, according to a report.
  • Beyond awareness, infrastructure is still one of the biggest challenges faced by merchants.
  • Digital payments today accounts to just 10% of all transactions in India.
Digital payments in India took off in a massive way right after demonetization, with the likes of Paytm leveraging the government move to become a household name.

However, a new study now reveals that more than half of the shops in Indian cities want to stay away from digital payments.

Awareness is not enough get Indians to use digital payments as only 48% of merchants accept digital payments, according to a report done by CUTS international. Expensive and unreliable infrastructure, unaware customers, lack of interoperability, transaction failures and charges are reasons why merchants don't prefer digital payments in India.

Digital payments is still considered to have a big opportunity in India and even the likes of giants like Google didn’t want to shy away from it. Google had launched its first ever digital payments app Tez which is now called Google Pay in September 2017. However, even Google Pay which managed to have 25 million monthly active users, has only 1.2 million businesses on the platform in India.

Cash is still king in India and digital payments today holds a mere 10% of all transactions in the country. Recognising that, the Payments Council of India recently submitted recommendations to the newly-formed panel by the government for digital payments. The panel is headed by industry veteran Nandan Nilekani. The PCI suggested seamless access to payments infrastructure and formation of a KYC bureau among multiple other things.


While right after demonetization going cashless meant digital payments saw a huge spike in numbers, in 2018 the conversation rate actually fell. According to data from the Reserve Bank of India, there was a one percent fall in digital payments in November 2018 when compared to November 2017.

Regulations, too, form a major role in the adoption of digital payments in India. While the current government has been encouraging of India’s shift to digitization and has been promoting a cashless India, mandates like compulsory KYC had halted the operations of many payment wallets. “More than 95% of the mobile wallets in the country could stop being operational by March,” said a senior executive with a New Delhi-based payments company to ET.

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