UPI Dominates Festive Payments as Credit Cards Boost E-Commerce Spending

The festive season of Diwali 2025 revealed a definitive shift in the country's digital payment landscape. UPI continued its meteoric rise, capturing the majority of daily transactions, while credit cards extended their edge in online commerce. Meanwhile, debit cards and prepaid wallets faced sharp declines, reflecting changing consumer payment preferences.

UPI Leads with Surge in Low-Value Transactions

Between Dhanteras and Diwali, UPI transactions soared, reaching an average of 737 million daily, up from 568 million last year, marking a 30% increase in volume. Yet, transaction value growth was modest at 2.7%, totalling ₹87,569 crore. 

This gap indicates a substantial rise in low-ticket spends for everyday and merchant payments, highlighting UPI’s deep penetration across retail categories.

Credit Cards Strengthen Online Spend Dominance

Credit cards maintained a strong e-commerce trajectory during Diwali 2025. Online credit card use surged 22% year-on-year, outpacing in-store transactions. E-commerce volumes reached 4.8 million transactions, against 4.2 million point-of-sale swipes, reiterating consumer preference for online shopping.

Decline of Debit Cards and Digital Wallets

Debit card transactions continued to shrink, with point-of-sale volumes down 11% and value by 9%. Prepaid payment instruments such as digital wallets and gift cards suffered an even greater fall, a 26% decline in volume and over 50% drop in total spend. These trends signal dwindling reliance on traditional digital modes in favour of UPI and credit.

Read More: Bajaj Finserv AMC Introduces ‘Pay with Mutual Fund’ Facility for UPI Payments!

Festive Boom Sets Stage for Broader Spending Cycle

For the third consecutive Diwali, UPI transaction volumes have tripled from 245 million in 2022 to 737 million in 2025. The total festive value more than doubled despite the smaller average ticket size, showing increased digital inclusion. Meanwhile, offline credit card spends rose 15.6%, rebounding after a 0.9% dip last year, indicating growing confidence in discretionary purchases.

Conclusion

Diwali 2025 cemented UPI’s leadership in digital payments through low-ticket, high-volume transactions. Credit cards remained crucial for high-value online purchases, while prepaid wallets and debit cards faded significantly. This transition suggests accelerated consumer adaptation to newer, more seamless digital payment solutions.

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