With an increase in credit card use in India, there's a decline in debit card usage.

With an increase in credit card use in India, there’s a decline in debit card usage.

2025-10-25

Over a five-year span, India witnessed its credit card transactions surge by more than 100%, whereas the total monetary value of these payments escalated even faster—more than doubling within the same timeframe. Meanwhile, debit card transactions experienced a notable downturn, both in terms of number and financial value.

The Rise of Credit Cards

A report from the Reserve Bank of India (RBI) highlights that credit card transaction volumes rose from approximately 2.1 million in 2019 to roughly 4.5 million by 2024. Conversely, debit card transactions plummeted from about 5 million to just over 1.7 million during this period.

This shift is partly attributed to the varied usage patterns of each card type: credit cards are more frequently utilized for online purchases, providing access to credit, and larger expenditures, while debit cards remain primarily for cash withdrawals and everyday spending needs.

The Emergence of UPI

While debit cards continue to be a dominant form of payment, the growth in the Unified Payment Interface (UPI) has significantly impacted their usage. As UPI handles almost half of the world’s digital transactions, it stands out as a powerful player in real-time payments systems.

The National Payments Corporation of India (NPCI), which manages UPI, now processes more transactions than both Visa and Alipay combined. Furthermore, its influence extends globally with recent expansions into new markets such as Qatar.

Debit Cards Remain Relevant

Despite the rise of real-time payment methods like UPI, debit cards are far from obsolete. Several factors contribute to their sustained relevance:

Increasing economic hardships have driven credit card debt to unprecedented levels, prompting cautious consumers to rely more on debit cards.

To attract users, many issuing banks now offer rewards or cash back incentives for debit card use, funded by merchants who benefit from avoiding higher interchange fees when customers opt for debit over credit.

The proliferation of fintech services has spurred an uptick in the number of debit cards in circulation. Companies like PayPal, Venmo, and Cash App have introduced their own debit products, and Klarna recently launched a debit card as well.

Given these factors, it seems likely that debit cards will remain a crucial part of India’s payment landscape for the foreseeable future, even as other payment methods evolve and expand.