In 2025, the way merchants handle payments is going to evolve rapidly and will be driven by the growing need for convenience, speed, and security.
So, whether you're grabbing a coffee from a local café or making an online purchase, chances are you’ll notice more businesses offering digital payment options.
But how exactly will merchants adopt these services, and what does this shift mean for consumers and businesses?
The Growing Trend of Digital Payments Among Merchants
One thing is clear: more and more merchants are incorporating digital payment services into their day-to-day operations. In fact, recent surveys reveal that,
Around 36% of merchants process over fifty digital transactions every month.
However, the majority of these transactions are relatively small—less than INR 15,000 per month—indicating that digital payments are mostly being used for everyday purchases rather than high-ticket transactions.
This growing adoption is being driven by a number of factors, from the ease of using QR codes to the rising demand from customers who prefer cashless options.
Let’s have a look at these contributory factors:
1. The QR Code Boom Continues:
One of the most popular ways merchants will adopt digital payment services in 2025 is through QR codes. This trend started a few years ago and has only gained momentum due to its ease of use and cost-effectiveness.
QR codes allow businesses to accept payments with minimal infrastructure—all merchants need is a smartphone and a printed QR code.
Popular platforms like PhonePe, Google Pay, Paytm, and BharatPe continue to dominate the market, with merchants preferring these services due to their wide consumer base and seamless user experiences.
Additionally, QR codes have proven to be especially popular among small businesses and vendors, enabling them to enter the digital economy without hefty setup costs or technical barriers.
2. The Rise of Multi-Mode Payment Acceptance:
As merchants adopt digital payment services, one thing has become clear: consumers expect multiple payment options.
In 2025, merchants will increasingly prioritize multi-mode payment acceptance, allowing them to accept payments via credit cards, mobile wallets, UPI, and even buy-now-pay-later (BNPL) services—all from a single platform.
This flexibility is crucial for businesses aiming to cater to diverse customer preferences. Consumers no longer rely on just one payment method, and merchants who offer multiple payment options are better positioned to capture sales from a wider audience.
Whether it’s a customer paying via Google Pay at a local store or using a credit card at a large retailer, multi-mode payment acceptance ensures no sale is missed.
3. Factors Merchants Consider When Choosing Payment Providers:
In 2025, the landscape of digital payment service providers is expected to be highly competitive. So, how do merchants decide which provider to go with?
While one might think that offers, rewards, or incentives would sway merchant decisions, it turns out that these factors are less important than you’d expect.
Instead, merchants are focusing on practical considerations like:
Multi-mode payment acceptance: The ability to process various payment types from different platforms.
Good customer support: Merchants need reliable, responsive support when issues arise.
Low transaction charges: Especially for small businesses, avoiding high fees is a critical concern.
Reliability and speed: Payment systems that ensure quick and secure transactions are preferred to avoid any customer frustrations.
4. Opportunities in Untapped Digital Payment Adoption
Despite the growing shift toward digital payment services, there’s still a vast opportunity to increase adoption rates, especially at the grassroots level.
Approximately 41% of merchants reported that less than 25% of their sales come through digital payments, showing a significant portion of the market is still reliant on cash.
So, what’s holding these merchants back? The reluctance of customers to switch to digital payments is a common reason, especially in rural or less tech-savvy markets.
However, as digital literacy improves and more people become comfortable with cashless payments, there’s immense potential to tap into these segments.
Why Should Merchants Switch To Digital Payments In Today’s Market?
Whether you're shopping for groceries or grabbing coffee, chances are you’ve noticed more businesses offering digital payment options. So, why should merchants make the switch to digital payments in today’s competitive market?
Let’s break it down. The shift towards digital payment technology isn’t just a passing trend—it’s a revolution that’s here to stay.
From the convenience of QR codes to the security of contactless transactions, digital payments are transforming how businesses operate and how customers shop and are:
1. Digital Payments Are Faster and More Convenient:
In 2025, consumers will expect fast, hassle-free transactions—and digital payments deliver just that. Whether it's through QR codes, mobile wallets, or contactless cards, digital payments allow customers to complete their purchases with just a tap or a scan.
No more fumbling for cash or waiting for change. With the rise of contactless payment options, customers can make purchases in seconds, reducing wait times at checkout and keeping lines moving smoothly.
For merchants, faster transactions mean you can serve more customers in less time, improving your overall efficiency. Whether you’re a small café or an e-commerce store, offering digital payments can significantly streamline your operations and enhance the customer experience.
2. QR Codes Are Shaping the Future of Payments:
One of the standout technologies in the digital payment space is QR codes. Originally seen as a simple way to share information, QR codes have evolved into one of the most popular methods for processing payments.
Why? Because they’re incredibly easy to use, both for businesses and customers.
There are two ways to implement QR code payments:
Customer-presented QR codes: The customer generates a QR code that the merchant scans using a payment terminal.
Merchant-presented QR codes: The merchant displays a QR code that the customer scans with their smartphone.
Whether you’re a new business or an established one, adopting QR code payments can help you start accepting digital payments immediately, with minimal setup.
This makes it an ideal solution for small businesses looking to offer more payment options without the added cost of traditional payment systems.
3. Increased Security and Lower Risk of Fraud:
When it comes to handling money, security is always a top priority. And this is one area where digital payments truly shine.
Contactless digital payments, such as mobile wallets or QR code payments, use encryption and other advanced security measures to protect sensitive information.
Unlike cash, which can be lost or stolen, digital payments reduce the risk of fraud and theft. Many digital payment platforms use technologies like tokenization—which replaces card details with unique codes during transactions—to protect customers' financial data.
For merchants, adopting digital payments means fewer security concerns and less handling of cash, which reduces the risk of theft at the point of sale.
4. Future-Proofing Your Business:
As consumer behaviors continue to evolve, staying ahead of the curve is essential for any business.
In 2025 and beyond, digital payments will only become more important as more consumers shift away from cash and credit cards toward faster, more secure payment options.
By adopting digital payment services now, you’re not just meeting today’s customer expectations—you’re also future-proofing your business for the digital economy.
As technology advances and more payment innovations emerge, having a flexible, secure payment system in place will help you stay competitive and adapt to future trends.
What Are the Key Challenges Consumers and Merchants Face with Digital Payments?
Digital payments have transformed the way we transact, offering convenience, speed, and security. However, despite rapid adoption, both consumers and merchants face significant challenges that slow down the full transition to a cashless economy.
From digital illiteracy to poor infrastructure, there are multiple barriers that impact the seamless usage of digital payments.
Let’s have a look at the key challenges present for digital payment adoption on various levels:
Customer-Level Barriers To Digital Payment Adoption
Despite the widespread availability of digital payment platforms, many consumers still face hurdles that make them hesitant to adopt these solutions.
Cash Still Dominates Transactions:
There is a possibility that cash is still king ideology will be followed in 2025 by many consumers, especially in developing economies like India. A deeply ingrained status quo bias leads customers to favor cash because of its familiarity and perceived reliability.
Consumers often overlook the "real cost" of using cash—such as ATM withdrawal fees, the time spent obtaining cash, and the risks of carrying physical money. These hidden costs are rarely considered, leaving many consumers unaware of how digital payments can simplify their financial lives.
Limited Awareness and Digital Literacy:
One of the most significant barriers to digital payment adoption is digital illiteracy.
According to a KPMG study, only 24% are financially literate.
This gap is especially prominent in vulnerable groups, such as rural populations and women. For example, about 60% of women in India have reportedly never used the internet.
The lack of understanding about how digital payment systems work leaves a significant portion of the population either uninterested or unable to take advantage of cashless payment solutions. The fear of making mistakes or falling victim to scams only deepens this reluctance.
Provider-Level Barriers To Digital Payment Adoption In India
Service providers also face challenges in creating digital payment solutions that meet the diverse needs of different consumer segments.
One-Size-Fits-All Solutions:
Most digital payment solutions are built with a one-size-fits-all approach, designed for more urban, tech-savvy users.
Unfortunately, this leaves out a large portion of the population, including low- and middle-income (LMI) segments who require simpler, more intuitive payment interfaces.
Language Barriers and Limited Customization:
Another challenge is the language barrier. Most digital payment platforms are developed in English or a few regional languages, but many users prefer their local language for transactions.
With 264 million people in India classified as "tech-handicapped," the absence of multi-language functionality in digital payment apps can be a major deterrent.
Additionally, most products focus on urban use cases like P2P transfers, online shopping, or investment services, which hold little relevance for rural or semi-urban consumers.
Ecosystem-Level Barriers To Digital Payment Adoption In India
The broader infrastructure supporting digital payments also presents significant hurdles.
Reliance on Internet Connectivity:
One of the biggest challenges for digital payments in regions like India is the heavy reliance on internet connectivity.
Although 83% of the population in India has access to wireless internet, this number drops to just 58% in rural areas, where mobile and broadband services are often unreliable.
Without consistent internet access, digital payment transactions are prone to failure.
Limited Payment Acceptance Infrastructure:
For merchants, one of the key barriers to adopting digital payments is the lack of widespread payment acceptance infrastructure.
India, for example, has 63 million micro-merchants, yet only 6.17 million Point-of-Sale (POS) machines have been deployed.
This gap in infrastructure is largely due to the high costs associated with setting up and maintaining payment terminals, the low volume of transactions in rural areas, and the lack of merchant education on how to use these systems.
What Do Consumers and Merchants Expect From Digital Payment Solutions?
As digital payments continue to evolve, consumers and merchants have a range of expectations that must be met for these systems to succeed.
Whether it’s improving infrastructure, offering better security, or simplifying processes, the digital payment landscape has to address the needs of all users.
We’ll explore the key expectations that merchants and consumers have from digital payments:
Expectations of Non-Adopters from digital payments
For those who haven’t yet embraced digital payments, a few key factors are holding them back. According to surveys, non-adopters (both consumers and merchants) express concerns about infrastructure, capacity building, and security.
Better Infrastructure for Digital Payments:
One of the primary reasons many non-adopters remain on the sidelines is the lack of reliable infrastructure. In rural and underserved areas, poor internet connectivity and limited access to Point-of-Sale (POS) machines make it difficult to use digital payment systems.
Merchants, especially small business owners, want the assurance that they won’t experience downtime due to unreliable internet or malfunctioning equipment.
Without these guarantees, they’re hesitant to transition from cash to digital payment methods.
Expectations of Current Users For Digital Payments
Current users of digital payments are already on board, but they still have expectations about how their experience can be improved. From better fraud protection to faster settlements, there’s plenty of room for improvement.
Awareness of Fraud Prevention:
Even as digital payments grow in popularity, users are increasingly concerned about the risk of digital financial fraud. Current users want more awareness initiatives to help them avoid scams and ensure that their transactions are safe.
Payment providers should focus on educating users about cybersecurity best practices and how to protect their personal information.
Simpler KYC Processes:
For many users, the Know Your Customer (KYC) process can be time-consuming and confusing. Simplifying the KYC process while maintaining compliance with regulatory requirements is a top priority for users who want a smoother experience.
Digital KYC solutions that minimize paperwork and speed up the verification process are becoming increasingly popular among consumers and merchants alike.
Merchant expectations From digital payments
Low Transaction Fees and Transparent Pricing:
For any business, controlling costs is essential. One major concern for merchants when adopting digital payment solutions is the transaction fees associated with each payment.
Merchants expect lower transaction fees and transparent pricing models that allow them to understand exactly what they are being charged and why. Hidden fees or complex fee structures can be frustrating and lead to dissatisfaction with the payment provider.
Seamless Integration with Business Tools:
Running a business involves much more than just accepting payments. Merchants use a variety of tools for managing inventory, handling customer relationships, and analyzing sales performance. One of the expectations from digital payment solutions is the ability to integrate with other business tools seamlessly.
Merchants want digital payment systems that connect with POS systems, accounting software, and inventory management tools.
This integration allows merchants to keep their financial records organized, automate processes, and gain insights into their business’s financial health.
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