70% MSMEs rely on UPI for half of their retail sales

Mumbai, May 16 (KNN) About 70 per cent Micro, Small and Medium Enterprises (MSMEs) believe more than half of their retail sales will be via UPI, said a study on Tuesday.

NeoInsights, a MSME-focused digital lender in India revealed this in a study titled ‘Decoding Digital Payments: A Retailer Perspective’.

The study was based on a comprehensive assessment of NeoGrowth's customer data set of 3000 retailers along with a survey of 1000 retailers across the nation, said the official statement.

It covered the digital payments adoption behaviour of Indian retailers across 25+ cities and 70+ industry segments.

Signifying remarkable adoption of digital payments among retailers in India, Arun Nayyar, Managing Director and CEO, NeoGrowth, said “MSME Retailers are increasingly recognizing the benefit of using digital payments in their business driven by ease of use and customer convenience. UPI is spearheading the adoption of digital payments among Retailers by ticking all the right boxes.”

“We, at NeoGrowth, will continue to support the MSME sector to leverage the power of digital payments to improve their financial health and drive business growth. Digital Payments are a powerful tool to extend credit to underserved and unserved retailers. We are confident that the Indian retail landscape is well-positioned for a bright and prosperous future,” he added.

Customers today prefer making on-the-go purchases using digital payment methods and are more likely to buy from retailers who offer this option as 7 out of 10 retailers believe over 50 percent of their sales will be done through UPI in the next three years, as per the study.

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.

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 percent 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, said the study. 

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.  (KNN Bureau)