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India's Payment Shift: How Credit Cards and UPI Are Winning the Spending Battle

A new payments report shows India's spending habits are changing fast. Credit cards are now the go-to for big purchases and online shopping, thanks to rewards and easy EMI options. Meanwhile, UPI has completely taken over for buying everyday things like groceries and chai. This shift means people are using their debit cards less and less for both small and large payments.

Key Points: Credit Card and UPI Growth Surges as Debit Card Use Declines

  • Credit card transactions surged 26% in value, driven by EMI purchases and rewards programs
  • UPI transaction volume grew 34%, becoming the default for small daily payments
  • Debit card usage fell sharply by 22% as users shifted spending to other methods
  • Prepaid card use rose for recurring bills but declined for large-value purchases
3 min read

High-value buying shifts to credit cards, UPI for everyday payments amid decline in debit card usage: Report

A new report reveals a major shift: credit cards dominate high-value spending and UPI is king for daily payments, while debit card usage falls sharply.

"Credit card transactions rose 26 per cent to 1.45 billion, with the transaction value reaching Rs 6.07 trillion. - Worldline Report"

New Delhi, December 19

Credit cards continued to dominate high-value consumer spending in the country, while UPI further strengthened its position as the preferred mode for everyday payments, according to a report by Worldline.

The report highlighted shifting payment behaviour, with users increasingly favouring credit cards, UPI and prepaid instruments, while debit card usage continued to decline.

The report stated this by highlighting the data for the third quarter of the 2025. It stated that during this period credit card transactions rose 26 per cent to 1.45 billion, with the transaction value reaching Rs 6.07 trillion.

This growth highlighted the strong role of credit cards in high-value and EMI-led purchases, supported by rewards programmes and flexible payment options.

In contrast, debit card usages declined sharply, with transactions falling to 0.33 billion, a drop of 22 per cent, while transaction value decreased 13 per cent to Rs 1.12 trillion. The report attributed this decline to users shifting routine spending to UPI and higher-value purchases to credit cards.

Prepaid cards recorded mixed trends, with transaction volumes rising 23 per cent, while transaction value declined 7 per cent.

The report noted that this reflects the growing use of prepaid cards for recurring and small-ticket transactions rather than large purchases.

Card issuance trends in Q3 2025 were led by credit cards. The number of credit cards in circulation grew 8 per cent year-on-year to 113.39 million, driven by strong consumer adoption of reward-based offerings and EMI features.

Debit cards increased modestly by 5 per cent year-on-year to 1,024.82 million, as their role in daily payments continued to be replaced by UPI.

Prepaid cards expanded 24 per cent year-on-year to 470.1 million, supported by corporate usage, transit solutions and wallet-driven use cases.

The report also highlighted the rapid growth of UPI. UPI transactions surged 34 per cent year-on-year, aided by expanding QR code penetration across Bharat. With 709 million active QR codes, scan-and-pay has increasingly become the default option for daily essentials and small-value transactions.

Average transaction size (ATS) trends remained stable across payment types. At point-of-sale terminals, ATS stood at Rs 2,934 for credit cards, Rs 2,908 for debit cards and Rs 150 for prepaid cards.

Online ATS was higher across all card types, reflecting the larger ticket sizes typically associated with e-commerce and digital services.

Overall, the report showed a clear shift in India's digital payments landscape, with credit cards strengthening their position in high-value and online spending, UPI becoming the default for everyday payments, and prepaid cards finding a growing role in recurring and niche use cases.

- ANI

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Reader Comments

R
Rohit P
The rewards and cashback on credit cards are too good to ignore. Why use a debit card and get nothing back? Banks are pushing credit cards aggressively. UPI is a game-changer for small vendors - even my local sabziwala has a QR code now.
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Arjun K
While the convenience is great, this report worries me. Are we normalizing credit and living beyond our means? The rise in credit card transactions is staggering. Financial literacy is key. We should celebrate UPI's success for financial inclusion, not just credit-led growth.
S
Sarah B
Interesting data. The average transaction size for UPI must be very low compared to cards. It shows India has successfully created a two-tier system: UPI for mass daily payments and cards for larger commerce. Much more efficient than the West's card-heavy model.
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Vikram M
Debit card decline was inevitable. UPI is instant, doesn't need a physical card, and works directly from your bank account. For online shopping, credit cards offer buyer protection and easy dispute resolution. Debit cards got squeezed from both sides. 👍
K
Kavya N
My parents still prefer debit cards, they find them safer. But for my generation, it's all about UPI and credit. The report misses one point - many people use credit cards to manage cash flow at month-end, not just for luxury purchases. It's a financial tool.

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