Urban consumers are increasingly using payment apps for shopping, travel and financial products, but low confidence in app-based lending could limit the next stage of growth.
India’s urban consumers are embracing payment apps not just for everyday spending but increasingly for broader financial needs, according to a Business Today report based on a recent survey. The findings suggest that unified payment platforms have moved well beyond simple money transfers, with many users now treating them as gateways to shopping, travel, fuel, medical bills and even financial products such as insurance and credit.
The report found that UPI was the most-used payment method in five of six spending categories covered by the survey. It was used by 71% of respondents for e-commerce purchases, 54% for dining out and travel, 53% each for fuel and transport, and medical and pharmacy expenses, and 49% for groceries. Cash still dominated rent, however, accounting for 49% of payments in that category. The appetite for consolidation was also clear: 52% of consumers said they would prefer a single app that handled payments, investments, insurance and credit, while another 33% said they would consider one if it matched the features of specialist platforms.
That enthusiasm weakens when the discussion turns to lending. The same report said users gave their payment apps an average score of 4.11 out of five for security and 3.98 for payments, but only 3.10 for credit services. Just over half, or 51.5%, said they would be open to borrowing through a payment app if fraud protection were guaranteed, while 16.7% said they would still not use such services. A separate report carried by the Times of India said tier-2 cities are ahead of larger metros in digital credit adoption, led by buy now, pay later usage at 60%, compared with 45% in metropolitan areas. It also said 64% of urban respondents have never formally applied for digital credit through an app, underscoring the gap between casual checkout financing and broader acceptance of app-based lending.
The broader backdrop is UPI’s rapid rise across India’s payments ecosystem. Data from the India Brand Equity Foundation show that by June 2026, UPI had onboarded 55.49 crore users and processed 24,161.69 crore transactions worth ₹314.23 lakh crore in fiscal 2026. IBEF also said UPI has become the world’s largest real-time payment system, accounting for 84% of India’s digital payments. Livemint reported that UPI’s share of retail payment transactions had reached nearly 84% by volume and 58% by value as of June 2026, with the system now active in several overseas markets as well. Against that backdrop, the Business Today findings suggest that the next challenge is less about building familiarity with digital payments and more about earning trust in adjacent products such as credit.
Merchants, too, appear to be seeing the benefits, even if operational frictions remain. The survey found that 80.6% were open to digital payments and 79.5% reported improved efficiency or sales after adopting them. Yet 72.1% of merchants reluctant to accept digital payments said settlement delays were their main concern. The report also flagged a festive-season spending surge, with 77% of respondents saying they spent at least 50% more than usual during the season, a reminder that digital rails are increasingly central to how urban India spends, borrows and shops.
Disclaimer: This article is intended to inform and educate, not to recommend or endorse any financial product, investment or strategy. Please consider your own financial circumstances and seek professional advice where appropriate before making financial decisions.
