Unlocking the digitisation potential of North East India
How the eight sister states take on the journey of merchant acceptance
A true frontier region, North East India commonly known as the Eight Sister states comprises Arunachal
Pradesh, Assam, Meghalaya, Nagaland, Mizoram, Tripura, Manipur, and Sikkim. Home to over 200 tribes, the
North East region (NER) is linguistically and culturally distinct.
To accelerate NER’s economic growth, the Ministry of Electronics and Information Technology, Government
of India launched the ‘Digital North East Vision 2022’ initiative to bring to light the opportunities
for growth; and design a framework to strategize and implement programmes in order to digitally empower
each of the states in the North East. Besides building digital infrastructure and empowering citizens
with knowledge, promoting digital payments has been outlined as a critical thrust area.
Since the launch of the initiative, remarkable progress has been witnessed in terms of digital
acceptance. UPI has now become the most popular mode of payment and 58%* of the total 15 lakh merchants
in the region have been digitized. In this month’s Pulse insight, we look at the drivers, use cases and
impact of PhonePe’s merchant digitization efforts in the NER.
Ecosystem Drivers for Digital Payments in the NER
Merchants, be it owners of grocery stores, restaurants, neighbourhood kirana stores, apparel stores, or
chemists, are increasingly adopting newer technologies for ease of payment to further their businesses.
The key factors that have accelerated adoption in the NER are:
Smartphone access*: 47% people in the NER own smartphones, only 1% less than the
national average of 48% - creating a solid foundation for any digitisation efforts in the North East
Internet subscription & penetration*: The internet subscription rate in the region
is 43% against the 55% average in the country. Internet penetration is higher in Assam at 38% when
compared to states such as Bihar which stands at 30% penetration indicating that with the right
push, NER can scale new heights of digitisation.
Bank account linkage*: On an average 86% bank accounts are linked with a mobile
number in the NER. The states - Manipur(91.4%), Mizoram(92.1%), Nagaland(94.7%), and Sikkim (92.7%)
even cross the 90% mark offering an opportunity to develop strategic payment digitisation measures
to realise the ₹130,000 crore retail digitization potential of the region.
Use cases of digital payments in the NER
The PhonePe Pulse data throws light on the varied use case of digital payments in the NER. The
transaction split in the graph below shows P2P (peer to peer transfers) as the largest category followed
by merchant payments which include payments made online as well as offline.
Category wise Transaction Split
Increased Merchant Acquisition in NER
Although digitisation of offline stores is still comparatively low in North-East states, there has been
tremendous growth in recent years. Retail and shopping is the most popular category among merchants in
the region and over 68 thousand merchants falling in this category have been digitized.
PhonePe’s consistent efforts to educate, engage and empower merchants have led to phenomenal network
growth. PhonePe is accepted as a payment option across the toughest terrains of NER including far-flung
towns such as the Changlang district in Arunachal Pradesh. Assam witnessed the fastest adoption with
2.5+ lakh merchants in 2022 compared to just 10,000 merchants in 2020, followed by Tripura, Meghalaya,
Arunachal Pradesh, Nagaland, Sikkim, and Mizoram.
Along with the acquisition rate, the transactions - both online and offline - have also seen a
significant rise from 52 thousand transactions in Q1 2018 to 2+ crore transactions in Q1 this year, as
seen in the graph below.
Quarterly Merchant Transactions Trend - North East
PhonePe furthering the agenda of a digital future for the North East
As the PhonePe Pulse data indicates, there is tremendous headroom for the growth of digital payments in
the North-East Region. Efforts like enabling rapid merchant acceptance and increasing consumer
awareness, are a few measures being actively addressed by the Government of India and fintech players
like PhonePe. With the objective to build simple, scalable, and innovative solutions making digital
payments for all Indians a reality, PhonePe will continue its efforts in bringing NER into the fold of
digital financial inclusion.