74% of Urban Retail Transactions Now Cashless, Says NeoGrowth Report

Digital payments have firmly entrenched themselves in India’s retail landscape, with 74% of all retail transactions in the top 29 cities now made digitally, up from just 45% two years ago, according to the latest NeoInsights Report by NeoGrowth, a digital lender to MSMEs.

The report, titled ‘How India Pays’, highlights a sharp behavioural shift towards digital spending. Categories such as personal grooming (83%), vehicle maintenance (80%), and groceries (68%) are now dominated by UPI, credit card, and debit card payments, reflecting the growing preference for speed and convenience.

NeoGrowth analysed data from over 21,000 MSME retail outlets across 29 cities, covering an estimated ₹35,000 crore in annual revenue. In FY25 alone, digital retail transactions reached ₹98 lakh crore, growing 23% year-on-year.

“Digital payments have transitioned from an urban convenience to a national standard,” said Arun Nayyar, MD & CEO of NeoGrowth. “This is a deep behavioural transformation — from kiranas to kiosks, small retailers are not just adopting digital tools but building trust in a future-ready financial ecosystem.”

City-Wise Trends

Digital adoption is strongest in Hyderabad (82%), Bengaluru (79%), and Pune (79%), while Visakhapatnam (76%), Nagpur (71%), and Chandigarh (68%) lead among non-metro cities.
However, cities like Ahmedabad (60%), Kolkata (55%), Jamshedpur (54%), and Rajkot (48%) still show high cash usage — a gap attributed more to consumer behaviour than access issues.

Young Entrepreneurs and Small Businesses Lead Adoption

Retailers in their 20s and 30s now earn nearly 80% of revenues digitally, while those over 50 have surged from 40% to 68% digital usage in two years. Interestingly, smaller businesses (turnover under ₹1 crore) have higher digital usage (79%) than larger ones (63%).

Early-stage retailers (under 3 years old) also integrate digital payments from the outset, reflecting how digital-first strategies are becoming foundational.

Policy Push and Infrastructure Support

India’s digital payments growth is supported by government policies, including the ₹1,500 crore UPI incentive scheme, Zero MDR, the JAM trinity, and BharatNet expansion. Rising smartphone usage and internet access continue to accelerate adoption.

As India’s digital economy gears up to contribute 20% of national GDP by 2030, NeoGrowth’s report underscores that the shift is youth-powered, Bharat-led, and retail-driven, marking a major leap toward inclusive digital growth.