Non-Metro Cities Calling The Shots Across Country’s Digital Payments Landscape

In a redeeming feature that also augurs well, non-metro cities are coming up much faster than the metros in terms of opportunity, aspirations and digital adoption as regards India’s digital payments landscape. For instance, credit spends in category B and category C+ cities grew by four times between 2019 and 2024, outpacing the 1.4X growth in metro cities. The share of online spending in category C+ cities soared from 53 per cent to 73 per cent across categories like apparel and travel, as well as digital services like gaming and online education.

Little wonder that financial institutions are finding greater opportunities in these cities to meet the rising demand for customised and secure financial solutions. These are no longer notions but statistics that are validated in a recent study undertaken by Visa Consulting & Analytics (VCA). Visa, the global leader in digital payments, has amply established that digital payment transactions in non-metro regions are growing faster than in metros, with card spending soaring 175 per cent since 2019.

The study based on insights from Visa’s data, dives into three categories: A – metros like Bengaluru, Delhi, Mumbai and cities like Pune and Ahmedabad; B – rapidly growing cities and districts such as Trichy, Bhubaneswar and Jaipur; and C+ – emerging cities and districts like Tirupur, Sangli and Tumkur. There is no doubt, whatsoever, that non-metro cities are the emerging vibrant hubs of opportunity and aspiration, driven by speedy digital adoption. As their ambitions evolve, these consumers seek tailored, flexible, and secure financial solutions.

The surge in digital payments in non-metro regions is not without reasons. It does not require any rocket science to understand that these surges are fuelled by rising income levels, rapid growth of e-commerce, and enhanced digital connectivity, supported by empowering Government initiatives like the Pradhan Mantri Jan Dhan Yojana (PMJDY), Digital India Program and Goods & Services Tax (GST). The VISA study indicates that in Cat C+ consumers spent over Rs. two lakh annually on a single card (vis-à-vis 2019) —significantly higher than the 1.4X increase observed in Cat A cities.

The expansion of e-commerce is the key to this growth; the share of online spending in Cat C+ cities jumped from 53 per cent to 73 per cent, with notable increases in discretionary spending across categories like apparel and travel. There is a marked increase in consumption of digital services in non-metro cities, where online gaming spends rose by 16X and that on digital content increased by 9X during the same period. Interestingly, formal credit penetration in category B+ cities was only 10.5 per cent in 2019, compared to 42.4 per cent in metropolitan regions. One has to keep in mind that though consumers in category B and category C+ cities have access to formal credit channels, they tend to depend more on informal credit sources, such as moneylenders or family loans due to limited credit history. That’s where lies a massive opportunity for lenders and businesses to innovate tailored credit products for this growing customer base.