The evolution of digital payments and fintech in India

A preview of Phocuswright's Fintech and the Indian Online Travel Landscape

By Coney Dongre

India has been a cash-dominant society for decades. The reasons physical currency persisted long after other economies had digitized trace back to infrastructure gaps, limited internet access and deep-seated trust issues. Until the mid-2010s nearly half the population lacked a bank account or any official form of identification, making cash the only universally accepted tender. When plastic money arrived, uptake was low and credit cards remained niche; less than 4% of adults held one in 2024. And debit cards, though issued in the hundreds of millions, functioned mainly as keys to ATMs rather than as tools for commerce. Cardholders faced an inordinate amount of friction: Newly issued cards were disabled for online or contactless use by default; checkout required second-factor authentication (2FA) in addition to the 16-digit card number and CVV, all on often sluggish bank pages; and every mis-typed digit or delayed SMS meant a failed payment. Add patchy merchant acceptance, widespread fear of fraud and a cultural aversion to debt into the mix, and India’s shoppers kept choosing the tactile certainty of cash.

Before fintech’s big bang, India’s online consumers muddled through net banking—manual NEFT/IMPS transfers, payee registration and clunky bank portals that only tech-savvy users tolerated. The real spark came when mobile wallets burst onto phones in the early- to mid-2010s. Paytm, FreeCharge and Mobikwik turned a recharge app into a pocket-sized purse: Load cash once, tap to pay, split a bill or gift money in seconds with no OTP marathons or detailed card information to provide. Cashback offers, QR codes at every tea stall and instant P2P transfers pulled tens of millions into their first digital transactions. Yet each wallet was a walled garden; funds couldn’t freely hop between apps or back to bank accounts. While mobile wallets demonstrated that Indians were ready for cash-free convenience, they also revealed that the country needed an open, interoperable channel to finish the job.

The Unified Payments Interface (UPI) Revolution

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Implications for the Travel Industry

India’s travel industry rode the same digital-payment wave that reshaped retail, but its inflection point arrived later—and with sharper consequences. Travel products demand full, irrevocable payment before issuance, so the sector could not lean on cash-on-delivery (COD) the way e-commerce did. For years that single constraint kept millions of price-sensitive, cardless Indians in offline queues and at the mercy of ticket agents.

As successive payment methods matured—from net banking to mobile wallets and finally to UPI—each unlocked a bigger slice of demand, accelerating the channel shift to online. The trend unfolded alongside rising digital literacy, broader 4G/5G access and upgraded, feature-packed booking sites from leading travel brands and online travel agencies (OTAs). In 2021, digital bookings tipped past the 50% threshold of overall travel spend.

UPI Boosts Self-Service Travel Bookings

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Online Travel Growth Beyond the Metros

UPI’s spread into India’s heartland is reshaping the customer map for travel brands. Evidence is mounting that Tier-2 and Tier-3 residents are now booking travel on mobile in large numbers. Ixigo offers the clearest proof: UPI is the preferred payment method for 80% of the OTA’s user base, and in the last quarter of FY25 (January 1 to March 31), 93.9% of its bookings touched at least one non-Tier-1 city.

Fresh Wave of Travel Fintech—From Niche to Mainstream

Buy Now Pay Later (BNPL)

Risk-Based Travel Flexibility Products

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The travel industry in India has been a direct beneficiary of the fintech and payments revolution. Fintech companies with large user bases have expanded into offering travel services, further propelling online travel transactions. Now fresh fintech solutions are catching on quickly nationwide, laying the groundwork for the next surge in digital travel growth.

In barely a decade, fintech has flipped India’s travel market from cash-and-agents to mobile-and-apps. UPI opened the door to self-service bookings for the masses, digital wallets and travel superapps put entire trips on a phone screen, and add-ons like BNPL and risk-based ancillaries removed the twin hurdles of affordability and risk. India’s next travel-fintech leap is likely to bundle several technologies at once: embedded finance, in which non-financial services companies, say Uber or WhatsApp, offer payments functionality to their business customers; an upgraded UPI stack (mandates, RuPay credit, One World QR) and virtual instruments such as single-use cards or even the Digital Rupee. These and other innovations in payments, credit and risk protection will widen the runway for millions of new journeys, ensuring that the next chapter of Indian travel will be written not just by planes and trains but by apps, a robust financial framework and seamless payment rails.

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