Studying The Gap: Only 32% of Indian homes pay digitally, though 68% have smartphones

By: |
January 15, 2021 5:15 AM

At the same time, among people that do pay digitally, the use of payment apps is more widespread than that of online banking, the report said.

The share of digitally-paying households would rise to 46% if those who desire to pay digitally are converted into actual users and to 54% if users who slipped off are brought back.

Only 32% of Indian households opt for digital payments even though 68% of them own smartphones, according to a survey by National Payments Corporation of India (NPCI) and thinktank People Research on India’s Consumer Economy & Citizen Environment (Price). At the same time, among people that do pay digitally, the use of payment apps is more widespread than that of online banking, the report said.

“There is a 36% gap between smartphone ownership and digital payment users. Bridging the gap between apps downloads and usage through education represents an immediate and low-hanging fruit opportunity,” the report, based on a study made among 5,314 households covering 25 states pre-divided into bottom, middle and top income states based on government data and samples drawn from each. The study addressed persons “mostly doing banking and payment related work for the household”, covering rural and urban chief wage earners of households.

The bottom 40% of households were those with an average annual income of Rs 1.1 lakh, the middle 40% consisted of households with an annual income of Rs 1.8 lakh and the top 20% were those with an average annual income of Rs 3.6 lakh.

The report said that almost a quarter of the households in the bottom 40% income group are using digital payments and 15% of the households in the bottom and middle categories would like to adopt digital payments. The share of digitally-paying households would rise to 46% if those who desire to pay digitally are converted into actual users and to 54% if users who slipped off are brought back.

Of the households that do pay digitally, 79% were found to be transacting through apps like Paytm and PhonePe and 52% through Unified Payments Interface (UPI). The report did not clarify if there is an overlap between the two categories. Online shopping using debit or credit cards was observed in 38% of households, while bank apps were found to be in use in 34% of households. “Households which are using UPI as a platform may not be completely aware about interoperability of the platform, there is a potential to create education about interoperability to increase adoption of UPI,” the report said.

Seventy-eight percent of households had bank accounts with state-owned banks, 10% had accounts with private banks and 13% had accounts with both sets of banks. Of the households who said they were eligible for direct benefit transfers (DBT), 85% said they had received transfers after lockdown and 84% said they had been receiving cash support even before.

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