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As the country’s payment landscape continues to expand, the focus is steadily shifting beyond metros. The growth of digital infrastructure, marked by the widespread adoption of QR codes (BharatQR, UPI QR), increased deployment of physical PoS terminals, and modern payment devices, has laid a strong foundation. While merchant onboarding has traditionally centred around Tier 1 and Tier 2 cities, rising e-commerce penetration and growing demand for premium products in smaller towns have prompted payment companies to redirect their focus toward Tier 3 to Tier 6 markets, which together comprise nearly 70% of the country’s population.
Yet, onboarding merchants in these regions introduces significant operational challenges. The process involves high costs related to device deployment, servicing, and after-sales support. In sparsely populated areas, where viable businesses are fewer, identifying merchants with the potential for sustained engagement adds further complexity. These dynamics require a more focused, cost-effective, and scalable approach to merchant acquisition and retention - one that can ensure long-term growth and inclusivity in India’s evolving digital payment ecosystem.
With deep experience in managing the end-to-end merchant onboarding and servicing lifecycle, Grant Thornton Bharat works closely with leading banks and non-bank acquirers to enhance merchant stickiness and improve activation outcomes.
Our engagements have yielded insights into the behavioural and operational drivers of successful merchant acquisition, particularly in underpenetrated areas. Building on this experience, we have developed a proprietary tool that identifies high-opportunity geographies for onboarding new offline merchants. This tool uses a structured analysis of digital payment supply and demand to locate underserved areas and prioritise acquisition activity.
By combining AI-based analytics with domain knowledge, our solution offers a practical, sustainable, and data-supported path to expand digital payments infrastructure in India’s Tier 3–6 markets.
Our aim is to deepen digital reach in underserved markets by delivering value to acquirers, empowering customers, and supporting broader goals of financial inclusion and economic progress.
The AI-based merchant acquisition platform supports merchant acquiring institutions by helping them:
The tool is designed to assist in quarterly or annual onboarding exercise by enabling focused geographic targeting and workforce deployment. This is further enhanced by providing an API that integrates directly into acquirers’ platforms, enabling FSEs to access dynamic data while on the move.
The analysis framework evaluates digital payment viability across geographies using the following core parameters:
Each parameter is weighted based on in-house research to create a composite score. This score informs strategic recommendations across:
To validate digital potential and competitive landscape, we conduct structured market surveys with a focus on:
The tool will define specific catchment areas for each FSE, with differentiated catchments tailored to various products such as QR codes, soundboxes, and PoS machines.
Catchments are segmented by city tiers, allowing targeted onboarding in Tier 3 to Tier 6 markets. This helps acquiring institutions optimise outreach strategies and align with schemes from RBI and government bodies.
The tool pinpoints specific sub-markets within villages or towns where merchant onboarding is more likely to succeed. For instance, within a village, it may flag sub-areas such as ‘Aa’ or ‘Ab’ as target clusters for activation.
Each region or locality is assigned an opportunity score based on defined parameters. This helps prioritise geographies with the highest potential for merchant engagement and onboarding success.
Merchant acquiring teams can empower FSEs with real-time, location-based insights through seamless integration with their business apps, enabling:
Merchant acquiring institutions can use the platform for detailed planning, including:
A strategic AI-based platform to identify and onboard offline merchants in underserved Indian markets, boosting digital payment adoption.
