Unified Payments Interface Moves Routine Spending From Debit Cards

Unified Payments Interface (UPI) has shifted routine digital spending away from debit cards, while credit cards have expanded in higher-value payments. In Fiscal 2026, credit-card transaction value reached Rs 23,62,470 crore, compared with Rs 4,45,480 crore for debit cards, while UPI transaction value reached Rs 31,42,325 crore.

How has UPI moved routine spending from debit cards?

UPI has become the main channel for routine digital payments by enabling instant transfers from linked bank accounts through mobile applications and quick-response, or QR, codes. In Calendar Year 2025, UPI processed 228.5 billion transactions worth Rs 29,97,000 crore, while person-to-merchant, or P2M, payments accounted for 143.8 billion transactions valued at Rs 8,51,000 crore.

UPI’s usage is concentrated in smaller payments. UPI represented about 83.4% of India’s digital-payment volume in Calendar Year 2025 and more than 84% in Fiscal 2026, according to the source. Its average ticket size, or ATS, declined from Rs 1,515 in Fiscal 2023 to Rs 1,396 in Fiscal 2024 and Rs 1,314 in Calendar Year 2025, showing that payment frequency has grown faster than average transaction value.

The system’s acceptance model has helped drive that shift. UPI initially allowed merchants to accept payments through phones and QR codes without conventional point-of-sale, or POS, terminals and merchant discount rate, or MDR, charges. The National Payments Corporation of India, or NPCI, is introducing MDR fees for certain payments affecting large merchants in the future, so UPI’s merchant-cost advantage depends in part on how those charges develop.

Why are credit cards carrying larger payments?

Credit cards are carrying larger payments because they combine card acceptance with credit access, equated monthly instalment, or EMI, facilities, and rewards programmes. In Calendar Year 2025, the credit-card ATS was Rs 4,150, more than three times UPI’s Rs 1,314 average and above the Rs 3,360 average for debit cards.

Credit-card transaction value rose from Rs 6,30,410 crore in Fiscal 2021 to Rs 23,62,470 crore in Fiscal 2026, representing a 30.2% compound annual growth rate, or CAGR, in the source’s fiscal-year series. The source links this growth to broader merchant acceptance, digital commerce, spending on travel, dining and e-commerce, and features including cashback, rewards and EMI programmes.

The difference also appears across payment channels. In the first half of Calendar Year 2025, credit-card ATS was Rs 3,031 at POS terminals and Rs 5,330 online, compared with Rs 2,888 and Rs 4,253, respectively, for debit cards. Continued credit-card value growth therefore depends on card acceptance, consumer demand for credit and instalments, and issuers meeting Reserve Bank of India, or RBI, standards on underwriting and customer protection.

What has changed for debit-card payments?

Debit cards have lost many small transactions to UPI, although they remain directly linked to bank accounts and are used in e-commerce, travel, bill payments and purchases where customers prefer card authentication. Debit-card transaction value fell from Rs 6,62,670 crore in Fiscal 2021 to Rs 4,45,480 crore in Fiscal 2026; the source’s separate Calendar Year 2025 series reports Rs 4,78,000 crore.

The rise in debit-card ticket size shows a change in the remaining payment mix. Debit-card ATS increased from Rs 2,636 in the second half of Calendar Year 2023 to Rs 3,113 in the second half of Calendar Year 2024 and Rs 3,360 in Calendar Year 2025. The combination of lower transaction value in the fiscal series and a higher average transaction suggests that debit cards are being used more selectively for relatively larger purchases while UPI takes lower-value spending.

Debit cards retain a substantial distribution base through financial-inclusion accounts. As of June 2026, about 584.5 million Pradhan Mantri Jan Dhan Yojana accounts had been opened and approximately 407.2 million RuPay debit cards had been issued, equal to about 69.7% of account holders. RuPay debit cards enabled for the National Common Mobility Card can also store value for contactless offline payments including tolls, metro, railways, transit and parking.

Does card acceptance still matter as UPI grows?

Card acceptance still matters because payment infrastructure and card transactions have expanded even as UPI has gained volume share. The number of POS terminals increased from 4.4 million in Fiscal 2020 to 11.8 million in Fiscal 2026, a 17.8% CAGR. POS card transactions rose from 6.39 billion worth Rs 26,05,000 crore in Fiscal 2025 to 7.1 billion worth Rs 30,40,000 crore in Fiscal 2026.

That infrastructure supports a payment mix distinct from QR-led UPI acceptance. In the second half of Calendar Year 2025, credit-card POS transactions totalled 1.51 billion, compared with 560.8 million debit-card transactions and 458.2 million prepaid-card transactions. These card payment counts show that POS usage remains material, even though UPI has become the dominant instrument for lower-ticket merchant payments.

The source forecasts that total cards in circulation will increase from 1,573 million in Fiscal 2025 to 2,245 million in Fiscal 2030. Credit cards are forecast to grow at a 21.8% CAGR from Fiscal 2026 to Fiscal 2030, compared with 3.3% for debit cards. Those figures are forecasts, not reported transaction results, and depend on issuance, merchant acceptance and consumer demand.

Conclusion

India’s payment data shows segmentation rather than the replacement of cards by UPI. UPI’s Rs 1,314 average ticket in Calendar Year 2025 and more than 84% share of digital-payment volume in Fiscal 2026 point to its role in everyday spending. Credit cards generated Rs 23,62,470 crore of transaction value in Fiscal 2026, while debit cards recorded lower value but a higher average payment size than UPI.

The next issue to watch is NPCI’s disclosed introduction of MDR fees for certain UPI payments affecting large merchants, which could change acceptance economics. The source also projects faster credit-card circulation growth through Fiscal 2030, while RBI prudential measures introduced in November 2023 require lenders to hold higher regulatory capital against consumer-credit exposures, including credit-card receivables.