Despite dominating transaction volumes, UPI contributed only 9.5% of the total transaction value, highlighting its role in facilitating low-value retail payments across the country.
File Photo: IANS
India’s digital payments ecosystem is increasingly being driven by small-ticket everyday transactions, with the Unified Payments Interface (UPI) accounting for 85.5% of total payment volumes during the second half of 2025, according to the latest Payments System Report released by the Reserve Bank of India (RBI).
Despite dominating transaction volumes, UPI contributed only 9.5% of the total transaction value, highlighting its role in facilitating low-value retail payments across the country.
Advertisement
In contrast, the Real Time Gross Settlement (RTGS) system, which is largely used for high-value corporate and institutional transfers, processed just 0.1% of overall transaction volumes but accounted for a massive 68.6% of the total transaction value, underscoring the continued dominance of traditional banking channels in value terms.
Advertisement
The RBI report also pointed to a sharp decline in debit card usage over the last four years amid the rapid rise of UPI, digital wallets, and credit cards.
Debit card transaction volumes fell from 4.087 billion in calendar year 2021 to 1.336 billion in 2025, marking a decline of nearly 67%. The value of debit card transactions also dropped from Rs 7.4 lakh crore to Rs 4.5 lakh crore during the same period.
“While the decline in debit card transactions, both in volume and value, is potentially driven by the rise of digital wallets, UPI, and credit card adoption, debit cards remain more widely held than credit cards,” the RBI said in the report.
On the other hand, credit card usage witnessed strong growth during the period. Transaction volumes more than doubled from 2.16 billion in 2021 to 5.7 billion in 2025, while transaction value surged from Rs 8.9 lakh crore to Rs 23.2 lakh crore, reflecting an annual growth rate of around 27%.
Private sector banks continued to dominate the credit card segment, driven by digital and co-branded offerings. Their market share increased from 67.7%, with 4.8 crore outstanding cards in December 2021, to 71.1%, with 8.2 crore outstanding cards by December 2025.
Public sector banks marginally improved their share from 23.5% to 23.9% during the same period, with outstanding cards rising from 1.6 crore to 2.8 crore.
Foreign banks, however, saw their market share decline sharply from 9.3% to 3.8%, while Small Finance Banks had issued around 14 lakh credit cards by December 2025.
In the debit card segment, public sector banks continued to dominate, although their share declined from 67.9%, with 63.7 crore outstanding cards in December 2021, to 63.1%, with 65.2 crore cards in December 2025.
Private sector banks improved their share in debit cards from 23.5%, with 19.3 crore cards outstanding, to 25.1%, with 26 crore cards outstanding during the same period.
“While credit cards are being increasingly used for online purchases and credit access, debit cards are mostly being used for cash withdrawals and basic transactions. Both instruments, however, face growing competition from digital alternatives,” the RBI report noted.
Advertisement
