Tier 2 and Tier 3 cities and towns continued to contribute over 50 per cent of all online transactions, which saw a healthy growth of 76 per cent in the first quarter of 2021 as compared to 2020, a new report said on Monday.

After seeing a steep decline in 2020 owing to the pandemic, travel industry grew by 50 per cent while real estate was up by 69 per cent in the first three months of this year.

As tourism opened up, Jammu and Kashmir made it to the top 10 'Digitally Inclusive States/Union Territories' for the first time, with a growth of 36 per cent in online transactions in the January-March period, ranking above Uttar Pradesh, Madhya Pradesh and Haryana, according to data provided by full-stack financial solutions company Razorpay in its 'The Era of Rising Fintech' report.

Payment options such as Buy Now Pay Later (BNPL) saw a whopping growth of 569 per cent in the last 12 months, owing to consumers avoiding bulk payments and preferring affordable payment modes.

UPI continues to be the preferred payment option followed by debit cards, credit cards and netbanking.

"Over 50 per cent of this digital adoption is coming from Tier 2 & 3 cities today, which indicates that this is not just an urban phenomenon. Small businesses are providing newer payment methods and reaching out to a wider customer base that transcends geographical boundaries," said Vedanarayan Vedantham, Head of SME business, Razorpay.

In the last few months, consumers have increasingly been ordering online and F&B industry witnessed growth of 69 per cent from January to March.

"Schools, colleges and online educational institutes have increasingly been accepting online payments for fees and salary payments, reflecting a 40 per cent growth in online transactions," the report mentioned.