A recent analysis of India's digital payments landscape has revealed a clear and accelerating shift in consumer behaviour. According to a detailed report by Worldline, credit cards have solidified their dominance for high-value expenditures, while the Unified Payments Interface (UPI) has become the undisputed champion for everyday, small-ticket transactions. This evolution comes at the cost of traditional debit card usage, which continues to see a significant decline.
The Rise of Credit and the Reign of UPI
The data for the third quarter of 2025 paints a vivid picture of this transformation. Credit card transactions surged by 26% to reach 1.45 billion, with the total value skyrocketing to an impressive Rs 6.07 trillion. This robust growth underscores the card's strengthened role in facilitating major purchases and transactions driven by Equated Monthly Installment (EMI) options. The popularity is fuelled by attractive rewards programmes and flexible payment solutions offered by issuers.
In stark contrast, the report highlights a sharp downturn for debit cards. Transaction volumes plummeted by 22% to just 0.33 billion, while the total value fell 13% to Rs 1.12 trillion. Experts point to a dual migration: consumers are increasingly using UPI for routine, low-value spending and are opting for credit cards for larger, planned purchases, leaving debit cards in a shrinking middle ground.
Prepaid Cards and UPI: Finding Their Niches
Prepaid payment instruments showed mixed signals. While the number of transactions grew by 23%, the total value dipped by 7%. This pattern suggests that prepaid cards are being adopted primarily for specific, recurring expenses and small-ticket items rather than for significant shopping sprees.
The true standout story remains UPI. Transaction volumes on the platform exploded, registering a 34% year-on-year increase. This phenomenal growth is powered by the relentless expansion of QR code infrastructure across the nation, including in smaller towns and rural areas (Bharat). With a staggering 709 million active QR codes in circulation, the 'scan-and-pay' method has become the default, convenient choice for purchasing daily essentials and managing small-value payments.
Card Issuance Trends and Transaction Insights
The trends in card issuance further reinforce the shifting preferences. The circulation of credit cards expanded by 8% year-on-year to 113.39 million by the end of Q3 2025. Debit cards, though numbering a massive 1,024.82 million, saw only a modest 5% growth, as their fundamental utility in daily payments is rapidly being eroded by UPI. Prepaid cards witnessed the fastest growth rate in issuance, jumping 24% to 470.1 million, supported by corporate payouts, transit solutions, and digital wallet integrations.
An analysis of the Average Transaction Size (ATS) offers deeper insight into how each instrument is used. At physical point-of-sale terminals, credit and debit cards were used for similarly high-value baskets (Rs 2,934 and Rs 2,908 respectively), while prepaid card ATS was much lower at Rs 150. Online, the ATS was higher for all card types, reflecting their use for bigger e-commerce and digital service purchases.
The overarching narrative is one of specialization: credit cards are the go-to for high-value and online spending, UPI is the effortless choice for day-to-day payments, and prepaid instruments are carving out a space in managed and niche expenditures. This report clearly maps the maturation of India's digital payments ecosystem, where different tools are being optimized for different financial needs.
