Before 2015, the residential rental market in India was mostly cash based. Since cheques and bank deposits were a cumbersome process, most landlords and tenants preferred dealing in cash for the sake of convenience. Cut to 2015 and Digital India was launched. 2016 witnessed the launch of Unified Payments Interface (UPI), which accelerated digital payments by making transactions simple and quick.
Both of these have had a monumental impact on the rental housing market in India, which is valued at USD 20.31 billion in 2024, and is projected to reach USD 26.78 billion by 2030, with a growth of CAGR of 4.56% during this period. The surge in the preference for rental accommodation across the nation was led by swift urbanisation, workforce mobility, and the appeal of flexible and affordable living choices.
However, just as the residential rental sector is expanding in scale, it is also indeed transforming in character. Along with the rise in demand for rental housing, India is witnessing a parallel shift in how rent payments are made. Post 2015, there has been a swift transition from paper-based and cash-led transactions to a digital, tech-enabled framework that lays emphasis on convenience, efficiency, and accountability. This transition further sheds light on a larger digital revolution which is altering India’s financial domain.
In the last few years, the initiatives promoting digital inclusion, in tandem with the ever-growing adoption of fintech innovations, have changed how money moves across the country. The rental market has become a noteworthy beneficiary of this development, which signifies the dawn of a digitally savvy rental ecosystem.
Forces Accelerating Digitalisation of Rent Payments
With the emergence of UPI, all kinds of transactions have become simple and quick. In October 2024 alone, UPI attained a historic milestone by processing 16.58 billion financial transactions in a single month, highlighting its pivotal role in India’s digital transformation. This growth has certainly also had an impact on rental transactions. Now, tenants are enabled to make secure payments within seconds and landlords can receive funds easily without the need for intermediaries.
By doing away with tedious processes of cheque deposits, cash handling, and manual bookkeeping, digital payments have streamlined the rent collection experience. For landlords, these systems offer rapid payment confirmations, along with a digital trail that simplifies financial management. Tenants enjoy the flexibility of scheduling recurring payments and viewing real-time payment histories. Enhanced security provided by encryption and multifactor authentication further boosts user confidence, making digital rent payments faster and safer.
The Digital India campaign, unveiled to boost digital literacy and financial inclusion, has created a conducive environment for the adoption of digital payments. Similarly, programmes like Pradhan Mantri Jan Dhan Yojana and the promotion of BHIM-UPI have expanded access to banking services, especially in rural and semi-urban regions. This alignment between public policy and innovation has democratised financial access, ensuring that digital rent payments are not purely limited to metropolitan regions but are steadily penetrating smaller towns and communities.
The surge of fintech innovation within the real estate industry has further pushed this momentum. Numerous platforms today have come up with dedicated solutions for rent payments, such as integrating credit card transactions, loyalty rewards, and alternative credit-scoring mechanisms based on rent payment history. These innovations are converting rent payments into avenues for building creditworthiness and accessing financial rewards.
Challenges and Opportunities along the Journey
Irrespective of the notable progress, the road towards a completely digital rental ecosystem is not without trials. While smartphone penetration and internet connectivity have vastly improved, certain segments of the population, especially in rural belts or among older demographics, continue to face barriers in digital literacy and access. Besides, security apprehensions pertaining to online fraud and data privacy discourage some users from adopting digital payments fully. The age-old cultural preference for cash introduces another level of complexity. For many landlords and tenants, cash retains an appeal for its immediacy and liquidity, mainly in scenarios where formal contracts or tax reporting are avoided.
Yet, amid these challenges also lie enormous opportunities. The digitalisation of rent payments holds the promise of formalising the rent ecosystem which has long been characterised by opacity. Automated records and e-receipts promote transparency, reduce chances of disputes, and support greater governance in tenancy arrangements. Moreover, digital rent histories serve as an alternative credit-assessment tool, enabling tenants to build a financial profile that could eventually assist in securing loans or mortgages. For landlords, integrated digital platforms simplify property management by automating payment reminders, producing tax-compliant receipts, and consolidating financial data.
As digital infrastructure seeps into Tier-II and Tier-III cities, landlords and tenants in these locations will also gain from the same efficiency and transparency. This expansion could unravel enormous value in a segment that represents a weighty share of the national rental market.
India’s rental ecosystem is at the connexion of technology, regulation, and change. The move to fully digital payments marks a transformation in how rental relationships will be structured and managed. While the path towards a completely digital ecosystem remains a work in progress, the trajectory is undeniably progressive. The cumulative force of UPI, governmental impetus, and fintech innovation is propelling the rental economy into an age of unparalleled formalisation and efficiency. Alongside, challenges like regulatory alignment, digital inclusion, and persistent reliance on cash, can be considered transitional.
As these gaps bridge, India’s rental payments ecosystem is going to become even more transparent, accountable, and integrated within the larger financial system. Digital transformation, backed by policy and innovation, will create a future where paying rent becomes a hassle-free and secure experience.
Authored By;
Sarika Shetty CEO and Co-Founder of RentenPe. She is a tech-enabled market disruptor app which is building India’s first Rent Credit Score (R Score™) and Residence Card (R Card™), aimed at formalizing the residential rental market and promoting financial inclusion through rental data.
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