Debit cards, once the primary mode of payment for millions of Indians, are steadily being overshadowed by the Unified Payments Interface (UPI). What was once the preferred option for point-of-sale transactions is now largely restricted to ATM withdrawals and the occasional in-store purchase.
Despite over one billion debit cards in circulation, their usage at merchant outlets has stagnated, declining nearly 8% year-on-year during the January–June 2025 period, according to a report by Worldline India. Analysts at the firm attribute this shift to UPI’s growing dominance in small-ticket payments, which has effectively cannibalised debit card usage.
The report highlights that the average ticket size of UPI transactions dropped from Rs 1,478 in the first half of 2024 to Rs 1,348 in the same period this year, reflecting how digital payments are increasingly being used for groceries, small household purchases, utilities, and other everyday expenses.
“Smaller spends at kiranas, delivery platforms, mobility services and utilities show how QR codes have been normalised as the default payment mode,” said analysts. They noted that merchants have embraced UPI for its ease of onboarding, zero-cost acceptance, and instant settlement — while consumers prefer the speed and simplicity of QR-based payments.
“There is a new hierarchy at play — UPI owns frequency, credit cards capture value, and debit is relegated to cash withdrawals. For issuers, the challenge is clear — protect relevance in a market where UPI dominates the bottom of the pyramid,” experts said.
In the first half of 2025, UPI transaction volumes touched 106.4 billion, marking a 35% year-on-year rise, with total transaction value reaching Rs 143.3 trillion. By comparison, overall point-of-sale volumes grew just 4% to 2.3 billion transactions. Credit cards accounted for most of this growth, rising 25% year-on-year to 1.3 billion transactions, while debit card usage plunged 24% to 516 million.
Debit card transactions have also declined in e-commerce, where credit cards continue to dominate higher-value purchases. Analysts predict that as “credit on UPI” and small-ticket Buy Now, Pay Later (BNPL) options gain traction, some traditional EMI flows could shift away from credit cards as well.
The report concludes that while UPI’s rise has expanded digital payment adoption across India, its rapid growth poses a new challenge — balancing convenience with viable economics for banks and payment providers.
With inputs from TOI
Despite over one billion debit cards in circulation, their usage at merchant outlets has stagnated, declining nearly 8% year-on-year during the January–June 2025 period, according to a report by Worldline India. Analysts at the firm attribute this shift to UPI’s growing dominance in small-ticket payments, which has effectively cannibalised debit card usage.
The report highlights that the average ticket size of UPI transactions dropped from Rs 1,478 in the first half of 2024 to Rs 1,348 in the same period this year, reflecting how digital payments are increasingly being used for groceries, small household purchases, utilities, and other everyday expenses.
“Smaller spends at kiranas, delivery platforms, mobility services and utilities show how QR codes have been normalised as the default payment mode,” said analysts. They noted that merchants have embraced UPI for its ease of onboarding, zero-cost acceptance, and instant settlement — while consumers prefer the speed and simplicity of QR-based payments.
“There is a new hierarchy at play — UPI owns frequency, credit cards capture value, and debit is relegated to cash withdrawals. For issuers, the challenge is clear — protect relevance in a market where UPI dominates the bottom of the pyramid,” experts said.
In the first half of 2025, UPI transaction volumes touched 106.4 billion, marking a 35% year-on-year rise, with total transaction value reaching Rs 143.3 trillion. By comparison, overall point-of-sale volumes grew just 4% to 2.3 billion transactions. Credit cards accounted for most of this growth, rising 25% year-on-year to 1.3 billion transactions, while debit card usage plunged 24% to 516 million.
Debit card transactions have also declined in e-commerce, where credit cards continue to dominate higher-value purchases. Analysts predict that as “credit on UPI” and small-ticket Buy Now, Pay Later (BNPL) options gain traction, some traditional EMI flows could shift away from credit cards as well.
The report concludes that while UPI’s rise has expanded digital payment adoption across India, its rapid growth poses a new challenge — balancing convenience with viable economics for banks and payment providers.
With inputs from TOI
