UPI push turns cigarette shops into unlikely winners of India’s digital payments boom

Small value transactions rising

India’s digital payments boom is reshaping everyday consumption, and cigarette shops have emerged as one of its more unexpected beneficiaries.

As Unified Payments Interface (UPI) use deepens across routine, low-value purchases, tobacco kiosks are cornering a growing share of digital money flows.

The shift is visible in both scale and structure. Transaction volumes at cigarette and tobacco outlets grew more than eightfold between November 2023 and November 2025, marking the fastest expansion among major consumption categories tracked.

UPI’s shift toward daily habits

Overall, UPI volumes nearly doubled over the same period from 6.6 billion transactions in November 2023 to 12.8 billion by November 2025. Much of this growth came from habit-driven, daily-use categories such as grocery stores, gas stations, pharmacies, dairies, and fast-food outlets.

Grocery transactions alone surged from 1.27 billion to 3.22 billion, lifting their share of UPI volumes from 19.2 percent to 25.1 percent. Fast-food outlets also doubled their presence in the overall transaction mix, underscoring how digital payments are increasingly being used for routine consumption.

Cigarette shops break out

Within this broader shift, cigarette and cigar shops stand out. Their share of total UPI transactions jumped from just 0.66 percent in November 2023 to 2.76 percent by November 2025—a more than four-fold increase in relative presence.

For much of 2023 and early 2024, the category accounted for well under 1 percent of UPI transactions. From September 2024 onward, however, usage accelerated sharply, with the share stabilising in the 2–2.7 percent range thereafter.

Micro-payments go digital

As transaction frequency rose, average ticket sizes fell steadily. At cigarette shops, the average UPI transaction value dropped from around Rs 81 in November 2023 to about Rs 60 by November 2025—far below the overall UPI average of Rs 595–Rs 650 during the same period.

UPI is becoming the default payment mode for micro-purchases that were once almost entirely cash-based.

The pattern mirrors developments in other small-ticket discretionary segments. Beer and liquor shops, confectionery retailers, barber salons and clothing outlets have all seen rising UPI shares in recent months.

In contrast, categories such as telecom and cable services—early adopters of digital payments—have seen their relative shares decline as UPI expands into a much broader universe of everyday spending.