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As UPI-based digital payments surge, debit card-based transactions dropped almost 8 per cent from nearly Rs 43,350 crore in August to about Rs 39,920 crore in September, according to the Reserve Bank of India’s monthly data. 

On the other hand, credit card transactions grew in the country, which saw a nearly 5 per cent increase in the month of September at Rs 1.76 lakh crore, from Rs 1.68 lakh crore in August, according to the latest data from the central bank.

As per market experts, the growth in credit card spending is driven by a lower base in the previous year and the festival season as there has been an uptick in promotional schemes like equated monthly instalments during the festival season.

According to the latest paper by economist Pradip Bhuyan from the Reserve Bank’s Department of Currency Management, digital transactions have surged in such a fashion in India that cash usage, which still accounts for 60 per cent of consumer expenditure (as of March 2024) is rapidly declining.

The share of digital payments more than doubled from 14-19 per cent in March 2021 to 40-48 per cent in March 2024, with unified payments interface (UPI) playing a key role.

According to the RBI paper, in recent years, significant growth has been observed in retail digital payments (RDP), which is the total digital payments except for payments through real-time gross settlement.

Launched in 2016, UPI accounted for the highest share of RDP in volume in the last five years. UPI-based transaction volume surged 52 per cent to 78.97 billion in the first half of this year (H1 2024), from 51.9 billion in the same period last year. Similarly, the value of transactions grew by 40 per cent, increasing from Rs 83.16 lakh crore to Rs 116.63 lakh crore in the first six months of this year.