India’s non-metro cities outpace metros with 175% payment growth

By Gloria Methri

Today

• Card Payments
• Cat B and Cat C cities
• digital payments in India

India’s digital payment revolution is no longer confined to its bustling metros. According to a new whitepaper by Visa, Bridging the Gap: Payments in India Beyond Metros, non-metro cities—particularly Cat B and Cat C+—are emerging as the nation’s most dynamic growth hubs for digital transactions. Since 2019, card spending in these regions has soared by an impressive 175%, outpacing growth in metros.

The whitepaper, released by Visa Consulting & Analytics (VCA), highlights the rapid adoption of digital payments in non-metro cities, driven by a mix of rising incomes, improved digital infrastructure, and tailored financial products. It categorises India’s cities into three groups: Cat A (metros like Mumbai, Delhi, and Bengaluru), Cat B (rising cities like Jaipur and Bhubaneswar), and Cat C+ (emerging hubs like Sangli and Tumkur).

Non-Metros: The Rising Stars of Digital Payments

Non-metro consumers are increasingly embracing digital payments, with Cat C+ cities witnessing a remarkable fourfold rise in consumers spending over ₹2 lakh annually per card, compared to just a 1.4X increase in metros. The share of online spending in these cities has also skyrocketed from 53% to 73%, fueled by growing eCommerce penetration and discretionary spending on categories such as apparel, travel, and digital entertainment.

In particular, online gaming and digital content have seen exponential growth in these regions, with spending increasing by 16X and 9X, respectively. This trend underscores the appetite for digital services beyond traditional metros.

Government initiatives like the Pradhan Mantri Jan Dhan Yojna (PMJDY), Digital India, and the GST have been pivotal in driving financial inclusion and digital adoption across the country. Enhanced digital connectivity and the spread of affordable smartphones have further bolstered these efforts, bringing financial services closer to underserved regions.

Despite the growth in digital payments, formal credit penetration remains a challenge in Cat B+ cities, where it was only 10.5% in 2019, compared to 42.4% in metros. Many consumers in these regions still rely on informal credit sources like moneylenders. This represents a significant opportunity for financial institutions to design tailored credit products that cater to these underserved yet aspirational segments.

What Consumers Want

The Visa study identifies four pillars that non-metro consumers value in financial products:

• Affordability: Flexible repayment options to suit varying income levels.
• Aspiration: Products with rewards, loyalty benefits, and lifestyle-enhancing features.
• Convenience: User-friendly solutions with multilingual support for first-time digital users.
• Trust: Secure, reliable payment methods with robust customer support.

Sushmit Nath, Head of Visa Consulting & Analytics, India & South Asia, emphasised the transformative potential of digital payments in non-metros: “These regions are vibrant hubs of opportunity and aspiration, driven by speedy digital adoption. Visa is committed to enabling financial institutions to serve these segments through tailored solutions better.”

As India continues its journey toward becoming a fully digitised economy, non-metro cities hold the key to unlocking the next wave of growth. With tailored solutions, enhanced security, and a commitment to innovation, Visa and other financial institutions can redefine the financial landscape in these emerging regions.

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