The study titled ‘Decoding Digital Payments: A Retailer Perspective’ was conducted by NeoGrowth, an MSME-focused digital lender in India.

Key findings:

UPI Payments set to rule the digital payment landscape in India

Customers today prefer making on-the-go purchases using digital payment methods and are more likely to buy from retailers who offer this option. Seven out of 10 retailers believe over 50 per cent of their sales will be done through UPI in the next three years.

The study indicates that retailers are also increasingly favouring digital transactions, with UPI being their preferred mode due to the convenience it offers to customers and the speed of payment receipt for retailers.

UPI adoption soars as more Indian retailers embrace digital payments

Retailers in Bengaluru saw a 14 per cent increase in the share of UPI among their digital transactions, followed by Chennai and Hyderabad at 13 per cent each compared to pre-COVID levels. Smaller cities only experienced a 4 per cent increase.

The FMCG and retail segment witnessed a 14 per cent increase in UPI transactions, followed by Food & Beverage at 12 per cent and fashion & lifestyle at 9 per cent which can be attributed to the retailers’ ability to accept digital payments easily and the increased comfort level of their customers in transacting digitally.

Decline in proportion of card payments as UPI transactions take over

Card transactions have experienced a decrease of around 12 per cent across industry segments and approximately 16 per cent across different locations. Industry segments such as fashion and lifestyle have dropped post-pandemic. The decline is most pronounced in bigger cities like Chennai, which were among the top card users. The ongoing trend of consumers adopting contactless payment methods, which gained momentum during the pandemic, has been a key contributor to this decline in card usage.

The majority of retailers prefer UPI over other payment methods; 70 percent of retailers prefer UPI for digital transactions.

Speed and ease continue to drive digital payment adoption

Instant receipt of payments and convenience to customers were the top motivators for retailers to use digital payments.

More than 50 per cent of retailers said that by adopting digital payment modes, they have seen an uptick in their sales and an improved buying experience for the customer. About 40 per cent of retailers have also stated that digital payments have helped them attract new consumers.

Better creditworthiness by broad-based use of digital transactions by retailers

Digital payments have also enabled new-age digital lenders to use retailers’ digital transaction histories to determine their creditworthiness. An encouraging sign is that almost 40 percent of retailers now prefer to use digital payments to repay their loans.

Digital Payments continued to thrive despite infrastructural challenges

The major hindrance faced by more than half of retailers were failed transactions, followed by the high cost of the machine and online fraud concerns. Promoting digital transactions among retailers will entail providing the necessary regulatory and infrastructural thrust to overcome these challenges.

You can read the full report here: https://www.neogrowth.in/neoinsights/

The study was conducted based on a comprehensive assessment of NeoGrowth’s customer data set of around 3,000 retailers and a survey of approximately 1,000 retailers across the country.

It encompassed more than 25 cities and over 70 industry segments to assess the digital payments adoption behaviour of Indian retailers.

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The primary goal is to enhance the ease of doing business for women entrepreneurs across India by improving their access to information and uptake of public schemes and initiatives.

The Sarthika web portal (https://www.tide.co/en-in/wehub-tide/) will work at the grassroots level and help navigate through the application process, eligibility criteria, and other important aspects of the schemes. After the completion of full KYC process, Tide India and WE Hub will work with relevant government departments to quicken operationalisation of the schemes.

The programme’s first phase consists of three schemes

• Prime Minister’s Employment Generation Programme (PMEGP): Focuses on credit subsidy for self-employment.
• Raw Material Assistance Scheme: Offers access to higher quality raw materials.
• Barcode Registration Subsidy: Enables businesses to conform to global standards of trade and commerce.

The government has rolled out several measures to boost growth and opportunities for women in business. However, a lack of information about eligibility and availability of schemes, poor allocation of resources, and complex processes have led to weak demand from those who these schemes could best serve.

WE Hub CEO Deepthi Ravula said, “Enabling access and opportunity for women to partake in the economic workforce of the nation is of pivotal importance to the growth of the nation. While there have been efforts to ease this process, awareness and handholding support is often amiss. In our collaboration with Tide, we are looking at addressing this problem statement and are positive that this will lead to a monumental change!”

This move also elevates Tide’s India Chapter of ‘Women in Business’ and the company’s plan to work as an incubator to digitally transform women-led SMEs beyond Tier 2 and 3 regions of India.

Earlier this year, Tide conducted a mentorship programme for women entrepreneurs to decode the Union Budget 2023 and help them understand how new government policies, tax laws, and funding opportunities may affect their businesses.

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Digital proficiency of MSMEs’ is therefore vital to empower them to grow in the online space successfully which in turn will help build the sector towards becoming future ready. However while digital integration offers an opportunity to grow, MSMEs’ face several barriers owing to limited access to internet and affordable digital tools, complex cross-border trade processes, shortage of digital skills, and difficulties in navigating digital regulations among others.

Today, a host of tech based platforms, are bringing about a revolution by helping MSMEs grow agile and become a catalyst in their own domain while driving socio-economic transformation. Backed by innovation and technology these platforms are enabling MSMEs optimize costs, improve operational efficiency, develop targeted products and services besides inculcating an entrepreneurial mindset.

Below are some of the leading tech based platforms that are empowering Indian MSMEs evolve and re-invent their businesses within the digital economy.

Freightwalla

Freightwalla is an intelligent Digital Freight Forwarder providing instant quotations for ocean freight, real-time tracking and digital solutions to streamline logistics operations. This Series A funded platform aims at bringing increased value and transparency while effectively addressing the pain points experienced in case of export shipments. Freightwalla enables exporters avail end to end digitised freight services inclusive of planning, booking and managing their international freight shipments online. Today, Freightwalla witnesses a shift in the exporters and importers mind-set using the digital mode of shipments – evolving as smart shippers.  With the digital way of shipments, shippers are now witnessing reduced timeframe in shipments, savings in over-all logistics costs, and stress-free end-to-end cargo movements.

PayNearBy

PayNearBy, India’s largest hyperlocal fintech network is strengthening local retailers by providing a wide variety of financial as well as non-financial digital services. With a robust network of 10 lakh+ retailers on-board, the company empowers the unbanked and underbanked population across the country to seamlessly avail services such as Aadhaar ATM, SMS Payment and Khata Services. Today it has extended its retail network to even offer non-financial services such as – Ecommerce, OTT, online education among many others. Through the lockdown alone, PayNearby disbursed benefit transfers worth over Rs. 6000 crores, across 17,200 pin codes across India.

LendenClub

Founded in 2018, LenDenClub is the fastest-growing peer-to-peer platform in India, brings together lenders and verified borrowers.Identifying a huge scope for small-ticket loans and addressing this significant need, the company offers small ticket loans through its platform Instamoney. It has been offering easy loans to small businesses and has helped a section of the population in tier III and rural regions who do not get credit from banks. Its instant personal loan platform InstaMoney has expanded its footprint to pan-India enabling borrowers from over 19,000 pin-codes to get credit facility in the quickest time.

MSwipe

Mswipe is a leading financial services platform for MSMEs in India. This payment acceptance and POS enabler has revolutionized the digital payment space for merchants across the country by providing convenient, safe  and affordable POS and other payment accepting systems to the merchants. Mswipe today serves over 1 million customers.

RazorpayX

RazorpayX is the neobanking platform of India’s newest unicorn Razorpay. The neobank has served over 10,000 businesses – processing their payroll through Opfin, paying for expenses through Corporate Card, and paying the vendors of businesses in real-time, disbursing billions of dollars through the underlying payouts layer. Fully-functional current accounts on RazorpayX can be opened by customers and operated. RazorpayX Current Accounts come with standard banking features such as cheque book, debit card, and account statements. The platform has capabilities such as API banking, approvals workflow, and insightful reports.

Meesho

Meesho enables small businesses and individuals to start their online stores via social channels such as WhatsApp, Facebook, Instagram, etc. Headquartered in Bengaluru, India, Meesho is one of the three Indian companies to be selected for Y-Combinator in 2016.

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