UPI Remains the Unchallenged Leader in Digital Payments

Unified Payments Interface (UPI) has achieved a significant milestone, surpassing 10 billion merchant transactions in October, marking a 53% year-on-year increase.

The rise in UPI usage during the festive season has solidified its position as the most preferred merchant payment system in India, surpassing both credit cards and mobile wallets.

Overall, UPI processed 16.5 billion transactions in October, according to data released by the National Payments Corporation of India (NPCI). On October 31, UPI set a new record with 644 million transactions on Diwali, the highest recorded on a single day.

While UPI led the growth among all merchant payment methods, credit cards saw a 35% increase in transactions, reaching 433 million in October, up from 320 million in the previous year, as reported by the Reserve Bank of India (RBI). In contrast, debit cards continued to decline, recording a 24% drop to 144 million merchant transactions from around 190 million in October 2022.

Mobile wallets also experienced a decline, with 442 million transactions in October, a 17% drop from the 533 million recorded in the same period last year. Industry experts attribute this downturn to the growing dominance of UPI and the shrinking appeal of mobile wallets, once a leader in digital payments.

“The decline in debit card and wallet usage can be attributed to UPI's growing popularity,” said Deepak Abbot, co-founder of fintech firm Indiagold, adding that "Debit cards now serve mostly for ATM withdrawals, and mobile wallets are limited to specific use cases like gift cards."

The suspension of operations by Paytm Payments Bank earlier this year also contributed to the decline in wallet transactions.

Despite a slowdown in unsecured credit growth, the number of credit cards in circulation has reached a record 106 million, up from 98 million last year. As of October 2023, the outstanding credit card debt stood at Rs 2.8 lakh crore, an increase from Rs 2 lakh crore a year earlier.