There was a time when buying goods from a shopkeeper without physical currency seemed like a fantasy, but times have changed. Today, whether it is a grocery store or a street vendor, you will find a small QR code displayed near the counter. Nowadays, shopkeepers—large or small—do not even ask whether you wish to pay by cash or card; UPI payment options are available even for online shopping.

Everyone finds paying via UPI easy, and the data reflects this trend. UPI has not merely gained popularity; it has quietly established dominance at payment counters, directly impacting card-based payments.

**How ​​massive has UPI become?**
According to data from the National Payments Corporation of India (NPCI), a record 24.51 billion transactions were processed via UPI in August, with a total value of ₹29.82 lakh crore. As reported by the *Times of India*, this figure surpasses the 23.66 billion transactions recorded in July and represents a 22% increase compared to August of the previous year.

The NPCI notes that the festive season—including Raksha Bandhan—provided an additional boost to transaction volumes through daily transfers and small gift payments. On a larger scale, the annual transaction value of UPI stood at just ₹0.07 lakh crore in the 2017 financial year, surging to approximately ₹314 lakh crore by the 2026 financial year—a leap of over 4,000 times in a decade.

According to the PIB, UPI's annual transaction volume has grown nearly 12,000-fold during this same period. UPI is now available in 11 countries, with Uzbekistan being the latest nation to join the network.

**Card usage is declining rapidly**
There was a time when card payments were the preferred mode of transaction among the wealthy and the elite, but UPI now dominates that space as well. In July, India's digital merchant payment market grew by 19.6% year-on-year, reaching a value of ₹11.73 lakh crore. Within this, UPI's Person-to-Merchant (P2M) share stood at a record 77.3%, up from 74.9% a year earlier.

Meanwhile, the share of credit cards declined to 17.7% from 19.8% the previous year. Debit card share also fell from 3.9% to 3.2%.

This shift did not happen overnight; it had been building gradually over several years. In 2021, cards (combined credit and debit) accounted for 26% of merchant payment volume and 53% of the value, while UPI's P2M share was 56%. Five years later, the landscape has changed. Despite the overall payments market expanding manifold, card payments have lost much of their grip at the point of sale.

**Biggest blow to debit cards**
According to Worldline's 2025 report, debit cards have suffered the most significant decline. Despite there being over a billion debit cards in circulation in the country, their usage at physical stores dropped by approximately 8% year-on-year. The report clearly states that debit cards are now primarily used for cash withdrawals rather than for making payments at shops.

A separate study by SBI Research found that for every ₹1 increase in UPI transaction value, debit card transaction value decreases by 14 paise. When scanning a QR code takes just five seconds and incurs no extra charges for the merchant, why bother carrying a card, remembering a PIN, or waiting for the card machine?

**What is the situation with credit cards?**
The report indicates that credit card spending continues to rise. In May, it grew by 2.6% month-on-month to reach ₹2.02 trillion. While UPI P2M spending surged by 25.2% year-on-year, credit card spending recorded a growth of 6.6%. The number of credit cards in circulation is also steadily increasing. More than 10 lakh new cards were added in just one month, bringing the total count to 12.05 crore. This implies that credit cards are not disappearing; rather, their role is evolving.

Cards Merging into UPI
The most significant shift is not the competition between cards and UPI, but rather the integration of cards into the UPI ecosystem. Since 2022, RuPay credit cards can be directly linked to UPI apps like Google Pay, PhonePe, and Paytm. Users scan the same QR code, but the payment is made using their credit limit instead of their bank account balance. While technically a minor change, its impact is substantial; it reduces the need for physical plastic cards while retaining the underlying credit facility.

Currently, only RuPay cards can be linked to UPI; Visa and Mastercard credit cards are not yet part of this facility. This is why the NPCI network is gradually capturing market share from global card networks.

Most banks have embraced this move rather than opposing it, and are now offering RuPay credit cards specifically designed for UPI spending. Some cards even offer additional rewards for QR-based payments. The next step is "Credit Line on UPI," which will enable banks to provide pre-approved credit facilities directly through UPI apps, eliminating the need for physical or virtual cards.

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