Only about four out of ten users in rural and semi-urban India have the country’s real-time payments system, Unified Payments Interface (UPI), as a preferred mode of transaction, with about two only preferring cash, according to a joint report by EY and CII.

       However, UPI is the most favoured mode of financial transactions in such regions.

       Over 400 million users transact using the payments ecosystem, either transacting to peers (peer-to-peer) or merchants (peer-to-merchant).

       On an average, the National Payments Corporation of India (NPCI) has recorded over 14.13 billion transactions per month in 2024.

       According to the report, about 11 per cent of respondents polled in its survey did not prefer UPI as a mode of payment in rural and semi-urban geographies in the country. The survey polled 1,033 respondents, out of which 73 per cent were from rural areas and 22 per cent were women.

       The sample included users from geographies such as Delhi, Tamil Nadu, Karnataka, Maharashtra, West Bengal, Uttar Pradesh, Bihar and North East.

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       “Our report’s findings suggest a fertile ground for financial institutions to introduce innovative saving and investment solutions, particularly in rural and semi-urban India, where there is inclination to learn about financial management,” said Saurabh Chandra, senior partner & Financial Services (Domestic) consulting head, EY India.

       On an average, about 94 per cent of Indians have access to a smartphone, signalling strong penetration of devices and potential to expand the footprint of digital transactions.

       Despite strong adoption of smartphones and affordable telecom coverage, more than 86 per cent of bank account holders in rural and semi-urban India prefer visiting branches highlighting reliance on traditional banking channels.

       When it comes to credit, 60 per cent rely on formal banking channels.

       “The ecosystem should leverage artificial intelligence (AI) and advanced automation to provide personalized, accessible and secure financial services. By clearly outlining each participant’s role in this system and motivating their involvement through gamification and measurable goals, a sustainable financial inclusion model can be built,” the report said.

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