UPI dominates festive payments yet again; credit cards cement e-commerce edge

UPI drives festive season sales

The Unified Payments Interface (UPI), the real-time digital payment system, continued its dominance, with transactions during the Dhanteras-to-Diwali period rising at a faster pace than any other mode of payment, a Moneycontrol analysis of NPCI data showed.

Average UPI volumes over the three-day period rose to 737 million per day from 568 million in the same period last year, a 30 percent jump in transaction count.

While the total value rose just 2.7 percent, the smaller increase suggests that low-ticket retail and merchant payments now make up a larger share of overall digital transactions.

Scan, Swipe, Click: Cards Keep E-Commerce Strong

Credit cards also logged robust growth, especially online. Credit card e-commerce volumes grew 22 percent year-on-year, even as debit card e-commerce usage fell 24 percent, underscoring the shift toward credit-based digital spending.

For the second consecutive year, credit-card e-commerce transactions outpaced PoS (point-of-sale) swipes — 4.8 million versus 4.2 million — reflecting the dominance of online retail over in-store purchases during Diwali.

However, growth momentum moderated: overall credit-card transaction volumes rose 22 percent, slower than 25.5 percent a year earlier. Offline spending, by contrast, rebounded sharply — PoS transaction volumes grew 15.6 percent, the highest in three years, after contracting 0.9 percent last festive season.

Debit-card payments continued their slide, with PoS volumes and values down 11 percent and 9 percent, respectively. Prepaid instruments (PPIs) such as wallets and gift cards saw the steepest fall — 26 percent decline in volumes and over 50 percent in value — signalling their shrinking relevance in a UPI-first ecosystem.

UPI’s Unstoppable Run

UPI’s meteoric rise stands out. Over the past three Diwalis, UPI transaction volumes have tripled, from 245 million in 2022 to 737 million in 2025, while total transaction value has more than doubled to Rs 87,569 crore.

A previous Moneycontrol analysis showed that credit cards are powering the festive e-commerce boom, helped by extra discounts on Flipkart, Amazon, and other apps. During Navratri 2025, credit-based transactions surged 26.8 percent, while debit-card payments fell for a third straight year and UPI growth moderated slightly.

Policy Tailwind for Consumption

The government expects the GST rate rationalisation from September 22 to sustain consumer momentum beyond the festive season.

“Because of the GST reforms, consumption will be significantly increasing, and it's very likely that consumption will increase more than 10 percent this year, which means there is a strong possibility of extra consumption of around Rs 20 lakh crore,” said Union Minister Ashwini Vaishnaw on October 18.