India’s payment habits have changed dramatically in just a few years. A QR code at a small tea stall can now do what once required a card machine. From restaurants and pharmacies to local shops and large retailers, paying through UPI has become almost second nature for millions of Indians.
This shift is now showing up clearly in payment data. UPI has become the dominant way to make merchant payments in the country, while debit cards are losing ground quickly. Credit cards, however, are taking a different route. They may be used less often at physical stores, but they are far from disappearing.
UPI Takes The Lead In Everyday Payments
The scale of UPI’s growth is difficult to ignore. According to NPCI data, UPI processed a record 24.51 billion transactions worth ₹29.82 lakh crore in August 2026. QR codes have played a major role in this growth. Businesses of almost every size can now accept payments without relying on traditional card machines. For consumers, the process is equally simple. Scan a QR code, enter the amount and approve the transaction.
The change is particularly visible in merchant payments. India’s digital merchant payments market reached ₹11.73 lakh crore in July, representing a 19.6% year-on-year increase. UPI accounted for a record 77.3% of person-to-merchant payments, compared with 74.9% a year earlier. Credit cards accounted for 17.7% of these payments, while debit cards had fallen to just 3.2%.
Debit Cards Are Taking The Biggest Hit
Debit cards appear to be facing the biggest impact from the UPI boom. There was a time when carrying a debit card was essential for everyday purchases. That is no longer the case for many consumers. A smartphone with a UPI-enabled app can now handle most small payments. There is no need to hand over a card, enter a PIN on a payment terminal or wait for a card machine to process the transaction.
Data from Worldline indicates that debit-card usage at physical stores declined nearly 8% year-on-year in 2025. Debit cards are increasingly being used for cash withdrawals instead of everyday purchases. The reason is fairly straightforward. UPI allows consumers to make payments directly from their bank accounts through their smartphones. The convenience has changed what people expect from a payment method.
Credit Cards Are A Different Story
It would be wrong to assume that the decline of card payments means credit cards are becoming obsolete. Credit cards continue to see growth in spending and remain useful for several categories of purchases. Online shopping, travel, electronics, larger purchases, rewards and EMI-based spending are some of the areas where credit cards continue to have an advantage.
The number of credit cards in circulation has also continued to increase. So, while their share of merchant payments is coming under pressure from UPI, consumers are not abandoning credit itself. Instead, the bigger change is happening in how that credit is accessed.
UPI Is Bringing Credit Into The Same Payment Experience
The integration of RuPay credit cards with UPI is one of the clearest examples of this shift. Eligible RuPay credit card users can link their cards to UPI applications and make payments at participating merchants by scanning a QR code. The experience looks similar to a normal UPI transaction, but the money is charged to the credit card rather than directly deducted from the user’s bank account.
This creates an interesting change in India’s payment ecosystem. UPI is increasingly becoming the interface, while the actual source of money can be different. The same trend can be seen with Credit Line on UPI. Eligible users can access pre-approved credit facilities through UPI without needing a traditional physical credit card for the payment. In other words, UPI is not simply replacing cards. It is also absorbing some of the functions that cards traditionally provided.
What Happens To Cards From Here?
India’s payment ecosystem is therefore unlikely to become a simple story of UPI replacing every card. Debit cards could increasingly become tools primarily used for ATM withdrawals and specific situations where UPI is not available. Their role in everyday merchant payments, however, is already shrinking.
Credit cards are likely to follow a different path. They still offer access to credit, rewards, EMI options and benefits that UPI does not necessarily provide on its own. But consumers may increasingly use those credit facilities through a UPI interface. That could make the physical card less important without making the underlying credit product irrelevant. With more than 55 crore users onboarded to UPI by June 2026, UPI’s role in India’s payment ecosystem is already firmly established.
UPI May Replace The Card, Not The Credit
The biggest change may ultimately be about the payment interface rather than the payment instrument. For everyday bank-account payments, UPI has already become the preferred option for millions of consumers. Debit cards have consequently lost much of their relevance at physical stores.
Credit cards are facing a different future. Instead of disappearing, they are increasingly being integrated into the UPI ecosystem. This allows consumers to combine the convenience of QR-based payments with the benefits of credit. So, India’s move towards UPI does not necessarily mean the end of cards. The physical card may become less visible, while credit itself continues to remain an important part of the payment ecosystem.
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