3 in 4 urban Indians use payment apps for investments, insurance or credit: Report

Three in four urban Indians have used at least one financial product, including investments, insurance or credit, through their payment apps, highlighting the expanding role of digital platforms beyond payments, according to the How Urban India Pays Report 2026 released by Pahlé India Foundation in collaboration with Amazon Pay.

However, digital credit adoption remains limited despite high awareness. While 88 per cent of respondents are aware of digital credit, only 31 per cent have used it, the report added. The findings are based on a survey of 5,149 consumers and 1,089 merchants across 100 cities in 20 states.

The report found that UPI is the most-used payment method across five of six spending categories. It is used by 71 per cent of respondents for e-commerce purchases, 54 per cent for eating out and travel, 53 per cent each for fuel and transport, and medical and pharmacy expenses, and 49 per cent for groceries. Cash remains prominent for rent payments, accounting for 49 per cent.

The preference for consolidating financial services is also evident, with 52 per cent of consumers saying they would prefer a single app for payments, investments, insurance and credit. Another 33 per cent would consider such an app if it offered features comparable to dedicated platforms.

Trust remains a hurdle for digital credit

Despite the growing adoption of digital payments, consumers are less confident when payment apps offer credit. Respondents rated their payment apps 4.11 out of five for security and 3.98 for payments, compared with 3.10 for credit services.

The report found that 51.5 per cent of respondents would consider borrowing through their payment app if fraud protection were guaranteed. Only 16.7 per cent said they would still decline.

Tier-2 cities lead digital credit adoption

Tier-2 cities recorded higher digital credit usage than metros across every product measured in the report. They led BNPL adoption at 60 per cent and credit applications at 41 per cent. Their Digital Credit Inclusion Index score of 58.64 was higher than Tier-1 cities at 53.10 and Tier-3 cities at 55.77.

Festive spending was another key finding, with 77 per cent of respondents reporting spending at least 50 per cent more than usual during the season.

Among merchants, 80.6 per cent were open to digital payments, while 79.5 per cent reported efficiency or sales gains after adopting them. However, 72.1 per cent of merchants hesitant about digital payments cited settlement delays as their primary concern.

The findings highlight the continued adoption of digital payments alongside challenges around credit trust and merchant cash flow.