UPI Dominates India’s Digital Payments, Cards Decline

India’s digital merchant payments market expanded significantly in July, recording a 19.6% year-on-year increase to reach Rs 11.7 lakh crore. This growth was largely propelled by the Unified Payments Interface (UPI), which achieved a record share of person-to-merchant transactions.

UPI’s share climbed to 77.3%, marking a substantial shift in consumer preference. This represents a 243 basis point rise from July 2025 and an additional 22 basis point increase from June 2026, according to Equirus data.

Traditional Payments Recede

In stark contrast, traditional payment methods continued to cede market ground. Credit cards experienced a notable decline in their share of merchant payments.

Their share fell to 17.7% in July 2026, down from 19.8% a year prior. This figure also sits below their 12-month average of approximately 19%.

Debit cards faced an even sharper reduction, with their market share decreasing to 3.2%. This is a drop from 3.9% previously, reflecting a clear migration of user activity.

Underlying Dynamics

The pronounced shift indicates consumers are increasingly moving spending directly from bank accounts to UPI. This trend is largely attributed to UPI’s widespread availability across merchant networks and its user-friendly interface.

The sustained growth of UPI and the corresponding decline in card usage highlight an evolving landscape. Digital payment methods are reshaping how transactions are conducted across India.