As digital payment methods evolve, Indians are increasingly opting for smartphones over traditional cards, driving a surge in UPI transactions. However, amidst this shift, debit cards retain their relevance, particularly for larger transactions.

Debit Cards: Resilience in Larger Payments

Despite a decline in transaction volume, debit cards remain a preferred choice for sizable purchases, according to Worldline’s India Digital Payments Report. The average ticket size (ATS) of debit cards surged by 24% year-on-year to ₹2,642 in the second half of 2023. This growth in ATS underscores the enduring popularity of debit cards for significant transactions, ensuring that transaction values remain robust despite a decrease in volume.

UPI Dominance in Microtransactions

In contrast, UPI transactions witness a decline in average ticket size, reflecting a broader adoption for smaller transactions. The ATS of UPI transactions decreased by 8% year-on-year to ₹1,515, driven by a surge in person-to-merchant (P2M) transactions. Despite the decline in ATS, UPI transactions experience exponential growth, with ₹99.68 lakh crore flowing through UPI channels in the second half of 2023, marking a remarkable 44% increase.

Proliferation of Mobile Payments

The rapid growth of UPI transactions coincides with the expansion of payment acceptance infrastructure, particularly Point of Sale (PoS) terminals, which increased by 26% between July 2022 and December 2023. This expansion, dominated by private sector banks, reflects users’ growing confidence in smartphone-based payment methods. Mobile payments have emerged as a dominant transaction avenue, facilitated by the unprecedented proliferation of PoS terminals.

Credit Cards: Growth Amidst Changing Trends

While UPI surges ahead of debit cards, credit cards experience notable growth in issuances and transaction values. Credit card issuances rise by 21%, with transaction value increasing by 11% to ₹9.39 lakh crore. The growing popularity of buy now pay later trends, both online and offline, contributes to the increased usage of credit cards.

In conclusion, while UPI gains momentum for smaller transactions, debit cards maintain their relevance for larger payments. The rise of digital payment methods reflects evolving consumer preferences and underscores the need for adaptable payment solutions in India’s dynamic financial landscape.