Tier 2 and Tier 3 Cities in India Lead the Next Wave of POS Adoption with Rising Digital Payment Demand

Tier 2 and Tier 3 Cities in India Are Driving the Next Wave of POS Adoption

Previously, POS device adoption was focused on metro cities in India. Today, Tier 2 and Tier 3 cities are now driving a significant demand for point-of-sale infrastructure, supported by government-led digitisation, better internet access, and rising consumer expectations.

From Agra to Bhubaneswar, Nashik to Surat, smaller urban areas are quickly becoming the new target for fintech firms and payment device providers.

Local Retailers Are Catching Up with Consumer Expectations

Due to UPI, smartphone penetration, and a growing confidence in digital transactions, even small-town customers now expect to see card or QR code options at checkout. This trend is pushing local businesses like grocery, F&B, fashion and electronics to adopt modern payment methodologies.

POS devices are used in:

• Branded retail chains entering Tier 2 markets
• Hospitals, clinics, and pharmacies 
• Franchise-based convenience stores and petrol stations

Government Schemes and Incentives Are Supporting the Rollout

There are a number of state and central initiatives that are driving digital inclusion:

• PM SVANidhi loans for street vendors often have a digital onboarding component
• Rural fintech awareness drives are promoting the use of POS and QR
• Public sector banks and NBFCs are financing POS terminals via EMI or rent-to-own models

These initiatives address adoption barriers and build a sustainable pipeline of users beyond metropolitan areas.

Device Makers Are Building India-Specific, Low-Maintenance Models

Having understood the special needs of smaller cities where services and maintenance can be limited, device manufacturers are launching:

• All-in-one smart POS devices with SIM-based connectivity
• POS terminals with Hindi or local language UI
• Small devices with integrated receipt printers and battery power

This makes it simpler for merchants to continue operations under different conditions.

For market sizing and regional POS adoption trends, explore our India POS Device Market

Smaller Cities Are Rapidly Leading Adoption

What started as a metro trend has now become a national movement. Businesses in Tier 2 and Tier 3 cities in India are becoming increasingly willing to adopt POS devices. The growth trajectory from these areas will have a determined impact on how providers build, price and support their solutions going forward.