UPI takes 77.3% of merchant payments as cards lose ground at checkout
UPI processed 24.51 billion transactions worth Rs 29.82 lakh crore in August. Its merchant-payment share reached 77.3% in July, while credit-card share fell to 17.7% and debit-card share to 3.2%. Cards remain strongest in e-commerce, travel and higher-value purchases.
What happened
UPI dominates Indian merchant payments, taking a 77.3% P2M share as credit and debit cards lose checkout relevance. Credit cards retain value for e-commerce,
Key facts
- UPI processed 24.51 billion transactions worth Rs 29.82 lakh crore in August
- UPI transaction volume was up 22% year-on-year in August
- UPI annual transaction value grew from Rs 0.07 lakh crore in FY17 to roughly Rs 314 lakh crore in FY26
- India digital merchant payments reached Rs 11.73 lakh crore in July, up 19.6% year-on-year
- UPI P2M share reached 77.3% in July, versus 74.9% a year earlier
- Credit-card merchant-payment share declined to 17.7% from 19.8%
- Debit-card merchant-payment share declined to 3.2% from 3.9%
- Debit-card physical-store usage fell nearly 8% year-on-year
- Credit-card spending reached Rs 2.02 trillion in May, up 2.6% month-on-month
- UPI P2M spending grew 25.2% year-on-year versus 6.6% for credit cards
- Credit cards in circulation reached 120.5 million
- E-commerce accounts for over 62% of credit-card spending
- About 5.2 crore of roughly 25 crore credit-active Indians own a credit card
Why this matters
Prioritize partnerships or acquisitions in UPI-native acceptance, payment orchestration and merchant value-added services, while targeting card assets with defensible high-value or online-payment niches.
What to watch
- Monthly UPI P2M share versus credit- and debit-card share, especially in organized retail.
- UPI transaction failure rates, bank-app latency and peak-period outage frequency.
- Growth in UPI credit products, RuPay credit card on UPI and credit-line-on-UPI adoption.
- Merchant payment acceptance costs, any MDR policy changes and PSP/payment-gateway pricing revisions.
- E-commerce card authorization rates, EMI penetration and card reward devaluations.
- Fraud-loss trends involving QR tampering, collect-request scams, account takeover and refund abuse.
- Average UPI ticket size and share of UPI in electronics, travel, fashion and other higher-AOV categories.
- Make UPI the first-presented payment method for low-to-mid-ticket checkout while preserving cards for EMI, rewards and high-value baskets.
- Deploy dynamic QR, payment-intent APIs and real-time status reconciliation to reduce cashier verification time and failed-payment disputes.
- Segment tender strategy by basket value, category and channel; measure conversion, authorization success, refund cost and fraud by payment rail.
- Use card-linked offers selectively for high-margin and high-AOV categories rather than broad discounting that subsidizes declining in-store card demand.
- Strengthen fallback flows for UPI downtime, duplicate-payment handling and customer support, including automated refund and reconciliation messaging.
- Expand UPI-linked loyalty, instant cashback and bank-partner campaigns where the incremental margin exceeds the incentive cost.