Winning Gen Z: Why fintechs are turning every payment into a consumer engagement opportunity

India’s fintech sector is moving beyond the race to make digital payments faster and more accessible, as companies increasingly look to turn routine transactions into opportunities for consumer engagement. With younger users expecting payments to connect seamlessly with shopping, rewards and financial services, fintech firms are building experiences around transactions rather than treating payments as an end in themselves.

UPI becomes the foundation for the next fintech wave

The shift comes as UPI has become deeply embedded in everyday spending. The National Payments Corporation of India (NPCI) reports more than 18 billion UPI transactions in a month, highlighting the scale of the infrastructure now available to fintech companies. The next opportunity, industry players say, is to build services that create additional value around this transaction base.

“India processes over 18 billion UPI transactions every month, which tells us that payments have become infrastructure. The opportunity now lies in building services on top of that infrastructure. Younger consumers expect every payment to create value, whether through rewards, commerce or better financial experiences. That is changing the way fintech companies think about product design,” Bhargav Errangi, Founder of Bengaluru-based fintech platform POP, told Business Today.

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Gen Z wants more from every transaction

For Gen Z and younger millennials, payments are increasingly part of a broader digital journey. A purchase can involve discovery, payment, rewards and post-purchase engagement within the same ecosystem. This is encouraging fintech companies to rethink how they acquire and retain customers, particularly as cashback-led strategies become more expensive to sustain.

POP, founded by Errangi in 2023, is one example of this approach. The platform combines UPI payments with commerce and rewards users with POPcoins for everyday transactions. These can be redeemed across a curated network of consumer brands, creating a link between payments and shopping.

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Fintechs shift from cashback to engagement

The broader industry is also moving towards engagement-led models as competition intensifies and customer acquisition costs rise. Cashback and discounts helped drive digital payment adoption, but fintech companies are increasingly looking for more sustainable ways to keep users active. A joint report by BCG and QED Investors has projected India's fintech sector to grow nearly three-fold by 2030, supported by deeper digital adoption and expanding use cases.

Payments could also reshape access to credit

The opportunity extends beyond rewards and commerce into financial services. Younger consumers often participate actively in the digital economy before developing long credit histories. Their UPI transactions, recurring payments and spending patterns can provide additional behavioural signals that fintech companies can potentially use to design more contextual products.

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“Gen Z is credit-active long before it becomes credit-visible. Many young consumers already demonstrate financial discipline through UPI transactions, recurring payments and responsible spending, but those behaviours are not fully reflected in traditional credit assessment,” Errangi said.

For fintechs, therefore, the battle for Gen Z is increasingly about owning the consumer relationship rather than simply processing payments. As the generation’s spending power grows, companies that combine payments with rewards, commerce and personalised financial experiences could be better positioned to turn high transaction frequency into deeper engagement and longer-term customer value.

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