Business EconomyPosted at: Oct 13 2026 1:57PM


Payment apps eye India's next credit boom as trust gap persists

Bengaluru, Oct 13 (UNI) India's digital finance industry is looking beyond payments for its next phase of growth, but converting widespread digital-payment habits into greater adoption of credit remains a challenge, with consumer trust emerging as a key hurdle, according to a report by Pahlé India Foundation in collaboration with Amazon Pay.
The report, How Urban India Pays 2026, found that while 88 per cent of urban consumers were aware of digital credit, only 31 per cent had used it. At the same time, 75 per cent had accessed at least one financial product through their primary payment app, indicating the potential to expand financial services through existing digital platforms.
The findings point to a gap between confidence in digital payments and willingness to borrow through apps. Respondents rated payment apps 3.98 out of five for payments and 4.10 for security, but confidence fell to 3.10 when the apps offered credit.
About 51.5 per cent said they would be willing to borrow through an app if protection against unauthorised transactions was guaranteed. However, 16.7 per cent said they would still decline, suggesting that security assurances alone may not be enough to drive adoption.
The Digital Credit Inclusion Index stood at 55.85 out of 100, placing India in the “Emerging and Served” category. While access scored 61.24 and adoption 57.17, the impact score was lower at 49.16, pointing to a gap between access to digital credit and its perceived benefits.
Smaller cities are emerging as important markets. Tier-2 cities recorded an index score of 58.64, ahead of Tier-3 cities at 55.77 and metros at 53.10. Buy-now-pay-later adoption in Tier-2 cities stood at 60 per cent, while 41 per cent of respondents had applied for credit.
The report also highlighted differences in access across occupations. Informal earners, including gig workers, daily-wage workers, homemakers, students and the unemployed, scored about 11 points below salaried and business respondents on the index.
Among gig workers, 67.5 per cent regularly used UPI Lite, while 23 per cent said they would first turn to a digital loan app during a cash crunch. About 43 per cent said digital credit had increased their financial independence.
“Digital payments have transformed from a novelty to a habit in less than a decade,” said Pahlé India Foundation chairman Rajiv Kumar, adding that the next phase would require greater transparency, cybersecurity and lending systems that recognise informal incomes.
Amazon Pay India CEO Vikas Bansal said consumers were increasingly using buy-now-pay-later and equated monthly instalment options to manage expenses and make aspirational purchases.
The report found that 52 per cent of respondents preferred a single app for payments, investments, insurance and credit, while another 33 per cent would consider such an option if it matched dedicated platforms.
Festive spending remains strong, with 77 per cent saying they spend at least 50 per cent more during the season. Among merchants, 79.5 per cent reported gains in efficiency or sales from digital payments, although settlement delays remained a key concern for those hesitant to adopt them.
UNI BDN
Tags: #Payment apps eye India's next credit boom as trust gap persists
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