Digital payments hit year’s highest levels in December as consumer confidence returns after GST cuts

Digital Payments hit new highs in December

• Most digital payments hit highest transaction volume and value in December
• Credit and debit card transactions fell 15 percent from September's peak
• December's digital payments grew in line with a 9 percent nominal GDP increase over December 2024

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Most key digital payments hit the fiscal year’s highest transaction volume and value in December, managing to sustain the momentum gained after the GST cuts in late September.

The major digital payment modes, such as the popular retail mobile payment method UPI and the automated electronic toll collection FASTag, recorded the highest volume and value during the month.

Other high-value payment modes, including non-consumer business payments such as for salaries, loan credit and car purchases, such as NEFT, RTGS, and NACH (credit and debit), also recorded the highest value and volume figures during December.

Digital Payments in December

Exceptions to growth

The high-value online money transfer method IMPS saw the value of transactions grow in December, compared with August or October.

Interestingly, IMPS saw a drop in volume over August and October, mostly due to the losing popularity of the method to UPI over the last few years. Customers are choosing IMPS for high-value transactions and UPI for low-value payments.

Moneycontrol reported previously that IMPS has been losing its sheen due to the growth of UPI.

The ATM network switch for cash withdrawals, NFS, and the online bill payment platform BBPS, recorded marginally lower figures than in October.

Cards for online spending

The only exception with a significant difference is the credit and debit card value and volumes, which are around 15-20 percent lower than September’s record high figures. The credit and debit card transactions are driven by online spending, which peaked in September, coinciding with the ecommerce platforms’ sales events that happened during the month.

The online sales see card discounts, and hence there is a higher propensity to use cards during the events. However, UPI has been taking market share from card spending since COVID.

To be sure, months with 31 days naturally have higher volume and value by virtue of having the one extra day, hence are not directly comparable with months with 30 days.

Record December

Interestingly, the December numbers are higher than October, the festival month that saw relatively higher values and volumes during the fiscal year.

Surprisingly, some of the highest digital payment figures for the current financial year for all digital payments before December were recorded in May, often higher than in October, when GST cuts and festivity sales spurred consumer expenditure.

The initial indication of a possible GST rate rationalisation announcement came in early August. The official announcement by Prime Minister Narendra Modi came in his August 15 Independence Day speech. The details of the rate cuts were announced after the GST Council meeting on September 3 and 4.

Despite several customers probably postponing their discretionary spending in August and the first half of September in expectation of a GST rate cut, May and August numbers were almost at par with October for most payments, possibly indicating a conservative behaviour of the customers during the festive season.

The growth in context

To be sure, the December 2025 numbers are around 10 percent higher than the December 2024 numbers, at par with the nominal GDP growth of around 9 percent.

However, the numbers are only around 3-5 per cent higher than in May or August, indicating that the impact of customer spending within the country has not increased significantly since the GST cuts.