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Payment methods in India

Find out how you can pay in India and which payment option is right for you.

Not sure how to pay in India? We break down all the common payment methods you can use in India, including in-store and online. Find out how each payment method works, where you can use it and what providers there are.

Payment methods in India

Cash

Cash is still accepted as a payment method in many places in India. In fact, some markets and local shops only allow cash payments. Yet in a few other stores, paying in cash is no longer possible.

According to an October 2020 McKinsey report, approximately 89% of all transactions in India by volume are cash-based despite the growth in digital payments.

Payment cards

While the number of cash payments has been decreasing over the years, the number of card payments, are going up. Payment cards in India can be split into two types: debit cards and credit cards.

  • Debit cards. A debit card is issued when you set up a bank account. It comes with a personal PIN code and allows you to make payments up to the maximum amount in your account balance. In principle, you can never spend more than what you have with a debit card unless you consciously choose to be in the red. Depending on the bank and default spending limit, you may actually may payments that exceed your balance. But do note that overdrafts usually come with a fee and high-interest rates.
  • Credit cards. Credit cards are available in two options: prepaid and regular credit cards. A prepaid credit card functions in the same way as a debit card since you can’t spend more than the balance on your account. To use a prepaid credit card, you’d need to load funds to the linked account in advance. When this balance is depleted, you’ll not be able to transact further unless you top up the balance – so it’s almost impossible to be in the red with prepaid cards. Prepaid credit cards are usually free and issued by banks or e-wallet service providers. A regular credit card is a form of unsecured credit issued by banks. It comes with a credit limit and an interest rate which is set by the lender. When you use a credit card, you are essentially borrowing money from the bank to pay the retailer for goods or services. At the end of each monthly billing cycle, you’ll receive a statement that tells you the total amount you owe the bank. By paying back the debt in full and on time, you typically won’t be charged any interest fees.

Top credit/debit card providers in India

Credit card companies

  • Mastercard
  • Visa
  • American Express
  • Diners Club

E-wallet prepaid debit cards

  • Neteller
  • Skrill
  • Masterpass
  • InstantPay
  • Open
  • Niyo
  • RazorpayX

Banks offering prepaid debit cards

  • Axis Bank
  • HDFC Bank
  • SBI
  • Yes Bank
  • ICICI Bank
  • Bank of Baroda

Contactless payment methods in India

Making contactless payments with debit cards (or your smartphone, smartwatch or other wearables) is possible at most point-of-sale terminals in India.

To conduct a contactless transaction, simply hold your connected device close to the payment terminal for the transfer to occur. Next, the accompanying app will prompt for authorisation and may require that you enter a PIN code. Do note that the upper limit of contactless payments via point of sale (PoS) terminals without the need to enter a pin is limited to Rs. 5,000 per transaction.

Contactless payment options in India:

  • Apple Pay
  • Google Pay
  • Samsung Pay
  • Mastercard Tap & Go
  • Visa payWave
  • Paytm
  • Rupay Contactless Card
  • National Common Mobility Card (NCMC)
  • Pockets by ICICI Bank
  • Ultracash

Online payment methods

In addition to ‘over-the-counter payments’, we’re also making online purchases a lot more frequently these days.

With the global rise of eCommerce, you can buy almost anything online – be it apparel, groceries, toiletries or pet supplies. In 2019, the World Bank reported that online transactions only accounted for 1.6% of total retail sales. This shows that while e-commerce has grown substantially around the world, it’s still relatively small in India.

When you check out an online order, you’d typically be able to choose from a wide range of payment methods such as credit/debit card, Paypal or other supported online payment services. This process is generally completed within minutes. Once the online merchant receives your payment, they’d proceed to pack and ship your purchases.

Online payment services in India:

  • PayPal
  • PayUmoney
  • Paytm
  • Pockets
  • CCAvenue
  • Razorpay
  • Instamojo
  • Cashfree
  • EBS

Direct bank transfer

In the past, one would have to head down to a physical bank branch and fill up a paper form in order to transfer funds between accounts. As technology advanced, we can now transfer money from a bank account to another online in a matter of seconds, anytime anywhere.

Most Indian banks rely on digital and mobile banking platforms to offer a range of services, and one of its main features is to allow its customers to send and receive payments 24/7. Simply fill in your recipient’s bank details (e.g. bank name, IBAN/SWIFT code, country, account number etc) and the amount you wish to transfer. Once you have initiated the transfer, the bank proceeds to verify if you have sufficient money in your balance to conduct the transfer and if the transaction is legitimate. This process is almost instantaneous.

Some banks even allow you to send a payment request in the form of a text message, email or WhatsApp. Ensure that the sender has the correct details of your bank account before transferring.

How to choose the right payment method

If you’re wondering which of the payment methods above is the most ideal, know that there’s no fixed answer to this since different situations call for different payment methods.

Here are some factors to consider when choosing a payment method:

  • Place. If you pay in a store or at the market, make sure to check for the types of payment methods that are accepted by the merchant. PIN payments are generally accepted at almost every retailer in India, but credit/debit card payments are not. Bear in mind that local shops or small market stalls may only accept cash payments.
  • Security. Different payment methods pose their own security risk. E-wallets, for example, are often not as strictly regulated as (online) banks in India. Depending on the transaction amount, your account balance, as well as the level of security you’re comfortable with.
  • Costs. Some payment methods may incur additional fees. For example, many Indian banks offer free Immediate Payment Service (IMPS) transfers up to a certain limit, and then charge a nominal fee thereafter. While these costs are usually negligible, they can add up over time. So make sure to keep this in mind before selecting a payment method.
  • Convenience. The ease of payment is also a point to take into account. For example, most Indian banks offer debit or credit cards equipped with contactless payment technology. In addition, you can often link these bank cards to contactless payment apps (e.g. Apple Pay or Google Pay) on your smartphone or wearables.

Indian bank accounts typically offer a wide selection of payment options, such as ATM withdrawals for cash payments, PIN input for debit cards, RFID chip embedded cards for contactless payments and 16-digit debit/credit numbers for online payments. This way, you can use a variety of payment modes with the same account.

Compare contactless bank cards

Name Product Monthly Account Service Interest Average Monthly Balance Fund Transfer
Kotak 811 Digital Bank Account
₹0
Up to 4% p.a.
₹0
IMPS
Access essential banking services such as NEFT / IMPS transfers and virtual debit card payments, without having to complete a full KYC verification.
Indus Delite
₹0
Up to 6% p.a.
₹0
N/A
Receive a rewards-packed Platinum Plus debit card with this zero balance savings account and benefit from attractive cashback, deals, complimentary insurance, and more.
HDFC Bank Instant Savings
₹0
Up to 2% p.a.
₹0
N/A
Choose and open a new HDFC savings account instantly at the comfort of your home. All you need is a valid mobile number, Aadhaar, and PAN details to get started.
Jupiter Account
₹0
Up to 2.5% p.a.
₹0
IMPS, NEFT, RTGS, UPI
Take control of your finances with advanced spend analytics, live insights and more. Earn 1% cashback on all purchases with a free debit card.
Payzello
₹0
N/A
₹5,000
IMPS
Benefit from a host of banking and payments features, plus a three-in-one smart card with integrated debit, credit and forex functionalities.
Digibank Savings Account
N/A
Up to 4% p.a.
₹5,000
IMPS, NEFT, RTGS, UPI
Benefit from competitive interest rates, spend analytics and effortless payments with this fully digital savings account.
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