Overall, in October, UPI recorded 16.5 billion transactions, data released by the National Payments Corporation of India (NPCI) showed.
ET had reported on November 4 that on October 31, the day of Diwali, UPI recorded 644 million transactions, the highest so far on a single day.
While UPI grew the fastest among all merchant payments modes, credit cards saw a 35% increase in transactions in October to 433 million transactions, compared to around 320 million a year ago, data released by the Reserve Bank of India (RBI) showed.
ETtechDebit cards continued to be on a downward slide, recording a 24% decline to 144 million merchant transactions from around 190 million a year ago.
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ET had reported on October 14, citing anecdotal data, that credit cards were expected to show a 35-50% jump in usage in the festive season, driven by equated monthly instalment (EMI) payments and buy-now-pay-later transactions.
Debit card usage, on the other hand, fell to less than half in October than that recorded two years ago. Industry insiders blamed the decline partly on the lack of debit card EMI offers by banks like HDFC Bank during this year’s festive season.
“I hardly saw any debit card EMI offers this year. Perhaps that is one of the major reasons why debit card swipes did not pick up at all,” said the chief executive of a Bengaluru-based payments firm, who did not wish to be identified.
A similar decline was seen in the use of mobile wallets, with 442 million transactions recorded in October, down 17% from 533 million a year ago, showed the RBI data, as the prepaid payments instrument which once ruled the digital payments market continued to fall out of favour.
Both debit cards and wallets have lost steam with the popularisation of UPI, said Deepak Abbot, cofounder of Noida-based fintech firm Indiagold. “Debit cards are only relevant for ATM swipes and mobile wallets are only used for very select use cases like gift cards and such,” he said. “Also, with Paytm Payments Bank’s operations frozen, the industry has lost one of its most popular brands, further impacting its volume.”
Significantly, between October 2022 and 2023, mobile wallet transactions had seen a growth of 9.4%. This was before Paytm Payments Bank stopped operations on March 15, 2024, following regulatory action.
UPI has become the de facto account-based payment method among Indians, while cards are mostly being used for credit-based purchases, said industry executives.
Although unsecured credit and the rate of issuance of new cards has slowed down, the number of credit cards has reached 106 million, the highest yet.
Credit card outstanding, or the total amount to be repaid by users, stood at Rs 2.8 lakh crore in October, compared to Rs 2 lakh crore a year ago, as per the RBI data.
