Home ／ Insights on entering the Indian market
2026.03.24
Digital payments in India are spreading at a pace unmatched anywhere in the world. UPI (Unified Payments Interface) processed 228.3 billion transactions in 2025, with a total value of about INR 299.7 trillion (approximately $3.6 trillion) (Meetanshi). In December 2025, it set a new monthly record of 21.63 billion transactions, and UPI has grown to account for 85% of India's retail digital payments (PIB India).
). This trend is also driving major change in the restaurant industry. Zomato, Swiggy Food delivery apps such as these run on 100% digital payment, and QR code payment is also becoming standard at physical restaurants. For Japanese companies entering India's restaurant industry, supporting cashless payment is no longer an "option" but a "requirement."
UPI is an instant funds-transfer system jointly developed by the Reserve Bank of India (RBI) and NPCI (National Payments Corporation of India). As of 2025, it is used by more than 500 million unique users and 65 million merchant outlets (DemandSage). PhonePe leads with a 48.3% market share, followed by Google Pay at 37.0%, and together these two apps cover more than 85% of UPI transactions.
A key feature of UPI in restaurants is that the setup cost is nearly zero. It can be adopted simply by printing and displaying a QR code, and merchant fees are free regardless of the amount (under the zero-MDR policy that took effect in January 2020, no MDR is charged on UPI P2M transactions). This low-cost structure is driving UPI adoption at restaurants of every size, from street stalls to high-end restaurants.
UPI (QR code payment): The highest adoption rate. Fees are effectively free. Instant settlement. Suits restaurants of every size. Usage exceeds 80% in Tier 1 cities such as Delhi and Mumbai.
Credit / debit cards: Mainly used at higher-priced restaurants. MDR (merchant discount rate) of 1.5-2.5%. The number of credit cards in circulation is expected to grow from 102 million in 2024 to about 300 million by 2030.
Wallets (Paytm, Amazon Pay, etc.): Growth has slowed with the rise of UPI. However, cashback and coupon features keep a certain base of users.
Via food delivery apps: In-app payment through Zomato and Swiggy. Restaurants bear a 15-25% fee, but it is offset by the customer-acquisition effect.
Tier 1 Cities (Delhi, Mumbai, Bengaluru, etc.): At mid- to high-priced restaurants, the cashless payment ratio reaches 60-80%. This is especially true at café chains (Third Wave Coffee, Blue Tokai and others) and QSRs (quick-service restaurants), where UPI accounts for more than half of payments.
Tier 2 Cities (Jaipur, Pune, Kochi, etc.): UPI adoption is rising rapidly, and as of 2025, digital payments usage at restaurants exceeds 50%. Displaying a QR code has become common even at small restaurants and food stalls.
Tier 3 and Below, and Rural Areas: Cash is still the mainstream payment method, but the spread of low-cost smartphones from Jio and Airtel is rapidly increasing the number of UPI users. The government's Digital India policy is helping drive adoption in rural areas.
The food delivery market, led by Zomato (about 800 million orders a year) and Swiggy (about 600 million), is the single biggest force accelerating the shift to cashless payment at restaurants. These platforms run on 100% digital payment by default, and the higher the share of a restaurant's sales that comes through these platforms, the further along it tends to be in adopting cashless payment at its physical location too.
When opening a restaurant in India, supporting UPI payment is essential from the very first day of operation. You need to open an Indian bank account (a current account) and register as a merchant with PhonePe Business, Google Pay for Business, or Paytm for Business. Once your QR code is issued, you can be up and running in as little as one to two business days.
In many cases, the POS system you use in Japan cannot be carried over as-is, so you will need to adopt a POS system built for India. Indian cloud-based POS systems such as Petpooja, Posist, and LithosPOS offer features including unified management of UPI, card, and wallet payments, GST (Goods and Services Tax) compliant invoicing, and menu syncing with Zomato and Swiggy. They are available for roughly INR 1,000-5,000 a month.
It is not unusual for 30-50% of an urban Indian restaurant's sales to come through food delivery. Listing on platforms such as Zomato, Swiggy, and the recently fast-growing Magicpin should be pursued alongside your cashless payment rollout. It is important to design your pricing with the platform fee (15-25%) factored in.
Building a loyalty program that leverages cashless payment data is key to winning repeat customers. Analyzing visit frequency and ordering patterns from UPI transaction data and offering personalized coupons and rewards can maximize customer lifetime value (LTV).
Eliminating Cash Entirely Is Premature: Even though UPI adoption is high, not every customer uses digital payment. You need to keep accepting cash as well, particularly for older customers and foreign tourists.
Dependence on Network Connectivity: UPI payment assumes an internet connection. You should have a backup in place for network outages, such as a POS system that supports offline payment or an NFC-enabled terminal.
Thorough GST Compliance: Restaurants in India are subject to GST (5% or 18%). Because cashless payment records are automatically traceable by tax authorities, accurate tax handling is essential. differences in Indian business customs It is important to understand these before you start.
PwC forecasts that by FY2027, UPI will process 1 billion transactions a day and that the digital share of retail payments will exceed 90% (Yethi). Furthermore, the ecosystem continues to advance through offline low-value payments via UPI Lite, integration with CBDC (digital rupee), and UPI's international expansion (links with Singapore, UAE, Bhutan, Nepal, Sri Lanka, Mauritius, France, and others; Japan is not yet connected).
For Japanese companies considering entering India's restaurant industry, supporting cashless payment is a factor that goes to the very core of the business plan. the big picture of entering India Grasping Local partners and building a business model that assumes digital payments from the start are the shortcut to success.
Digital payment in India is spreading rapidly, and UPI has grown to account for the majority of retail digital payments. QR code payment is also becoming standard at physical restaurants, and supporting cashless payment is now a requirement for entering the restaurant industry.
UPIはインド準備銀行とNPCIが共同開発した即時送金システムで、膨大なユーザーと加盟店が利用しています。QRコードを掲示するだけで導入でき、加盟店手数料は金額を問わずかからないため、小規模店でも使いやすい仕組みです。
UPI has high adoption and low fees, so it suits restaurants of every size. Credit and debit cards have higher fees and are used mainly at higher-priced establishments. Wallets have seen slower growth as UPI has risen, and payments via Zomato or Swiggy come with a fee borne by the restaurant, though this is offset by the customer-acquisition effect.
In Tier 1 cities such as Delhi and Mumbai, the cashless ratio is high at mid- to high-priced restaurants. Digital payment use is also spreading in Tier 2 cities, and even in Tier 3 cities and below, and in rural areas, the number of UPI users is growing as low-cost smartphones spread.
Food delivery platforms such as Zomato and Swiggy run on digital payment by default, and they are a driving force accelerating restaurants' shift to cashless payment. The higher the share of a restaurant's sales that comes through these platforms, the further along it tends to be in adopting cashless payment at its physical location too.
Supporting UPI from the very first day of operation is essential, which means opening an Indian bank account and registering as a merchant with each payment service. It is also a good idea to adopt an Indian-made cloud POS system and set up GST-compliant invoicing and delivery integration. We recommend keeping a backup in place for network outages while building digital payment into the core of your market-entry plan.
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