How Urban India Pays: Digital Payments Skyrocket 35% in 2025; Women, Gen Z Lead the Way

India’s digital payment ecosystem is witnessing rapid growth, with transaction volumes rising 35% in FY25, according to the How Urban India Pays 2025 report by Kearney India and Amazon Pay.

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How Urban India Pays 2025

India is moving at lightning speed toward a cashless economy, and everyday payments are going digital faster than ever. A new report, How Urban India Pays 2025, conducted by Kearney India with Amazon Pay, shows that online and digital transactions jumped 35% in FY25, reflecting a major shift in how people manage money.

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Women Entrepreneurs Take the Lead

Across cities and towns, women are stepping up as pioneers in India’s digital payment revolution. From running businesses to handling personal finances, digital payments are giving women more control.

Nearly 9 in 10 women now prefer digital methods for online shopping.

80% of women entrepreneurs are running their businesses using UPI, digital wallets, or card payments.

UPI is the most popular choice (34%), followed by cards (20%) and wallets (8%).

For many women, digital payments aren’t just convenient, they’re empowering. 57% of women are actively managing their finances, while middle-class women gravitate toward UPI and wallets, and affluent women lean on credit cards.

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Gen Z and Millennials Are Changing the Game

Young professionals are also shaping the future of credit in India. 65% of them apply for their first credit card immediately after starting their first job, motivated by perks like cashbacks, rewards, and building an early credit score.

Nearly half of these young users pick credit cards for rewards while staying responsible with repayments—showing that India's next generation wants both convenience and smart financial management.

"Retail digital transactions are set to cross $7 trillion well before 2030," says Shashwat Sharma, Partner and Financial Services Lead at Kearney India. "Women and Gen Z are redefining how India spends, saves, and builds financial independence."

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E-Commerce:

Online shopping has done more than change what we buy, it's changed how we pay. Urban consumers now rely on platforms not just for products but for smooth, integrated payment experiences.

Daily essentials are mostly paid for using cash or UPI, while big-ticket items like electronics or furniture are bought with credit cards.

Over 80% of e-commerce users rely on the platform's payment services.

Co-branded credit cards are becoming more popular, helping users earn rewards while shopping.

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Digital Payments Reach Smaller Towns

Digital adoption is no longer confined to metros. Towns across India are embracing the cashless wave:

• In-store digital payments in smaller towns jumped from 42% in FY24 to 50% in FY25.
• Metro cities continue to lead with 62% adoption, but cities like Lucknow, Jaipur, Kochi, and Bhubaneswar are catching up fast.

“Digital payments are no longer just a metro phenomenon,” says Vikas Bansal, CEO of Amazon Pay India. "People are paying digitally for everything from groceries to bills, and the ecosystem is becoming more rewarding and accessible."

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How Indians Pay

The report highlights the patterns in urban India:

• Utility bills (87%) and subscriptions are mostly digital.
• Electronics (19%) and apparel (14%) are largely bought on credit.
• Tap-and-go payments are catching on, now used by 21% of urban consumers.

People choose digital payments for trust, speed, and convenience. Improved internet connectivity has removed a major barrier, with only 31% citing network issues today, down from 51% last year.

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Government Efforts Boost Digital Literacy

The government’s push for financial inclusion is paying off:

• Over 6.39 crore rural citizens have been trained in digital literacy under the Pradhan Mantri Gramin Digital Saksharta Abhiyan.
• NPCI runs workshops for cadets, the visually impaired, and support staff on UPI, RuPay, and USSD.
• Pre-approved credit lines on UPI make credit accessible to small businesses and individuals.