Unified Payments Interface (UPI) has become the dominant method for merchant payments in India, rapidly changing how consumers pay at shops, restaurants, pharmacies and other businesses. While debit cards have suffered a sharp decline, credit cards are adapting rather than disappearing.

UPI Takes Over Everyday Payments

UPI processed a record 24.51 billion transactions worth ₹29.82 lakh crore in August 2026, according to NPCI data. The platform’s scale has transformed the Indian payment experience, with QR codes now common across businesses of every size.

The growth is particularly visible in merchant payments. In July, India’s digital merchant payments market reached ₹11.73 lakh crore, up 19.6% year-on-year. 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%, while debit cards fell to just 3.2%.

Debit Cards Face the Biggest Impact

Debit cards have been hit hardest by UPI’s rapid expansion. Consumers no longer need to carry a physical card, remember a PIN or wait for a card machine when a QR scan can complete a payment within seconds.

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 rather than everyday purchases.

The shift reflects a fundamental change in consumer behaviour: bank-account payments have become easier to access directly through smartphones.

Credit Cards Are Not Disappearing

Credit cards tell a different story. Their share of merchant payments is declining, but spending on credit cards continues to grow.

Credit cards remain particularly useful for e-commerce, travel, electronics, larger purchases, rewards and EMI-based spending. The number of credit cards in circulation has also continued to rise.

This means UPI is not necessarily replacing credit itself. Instead, it is increasingly competing with the physical card as the interface through which payments are made.

Cards Are Moving Inside UPI

One of the most significant developments is the integration of RuPay credit cards with UPI.

Customers can link eligible RuPay credit cards to UPI applications and pay merchants by scanning the same QR codes used for ordinary UPI transactions. The payment is charged to the credit card rather than directly debited from the user’s bank account.

The development effectively separates the payment interface from the underlying source of funds. A consumer can use UPI’s convenience while still accessing credit.

Credit Line on UPI takes the concept further by allowing eligible pre-approved credit facilities to be used through UPI without requiring a traditional physical card.

A Different Future for Cards

India’s payment market is therefore moving towards a hybrid model rather than simply eliminating cards.

Debit cards may increasingly be pushed towards ATM withdrawals and limited use cases, while credit cards remain relevant for credit-driven spending. UPI, meanwhile, is becoming the common interface through which bank accounts, credit cards and eventually other forms of credit can be accessed.

With more than 55 crore users onboarded to UPI by June 2026, the platform’s dominance is already deeply embedded in India’s payment ecosystem.

Summary: UPI has captured 77.3% of India’s digital merchant-payment market, sharply reducing the role of debit cards and shrinking the merchant-payment share of credit cards. However, credit cards are not becoming obsolete. They remain important for larger purchases, online shopping and rewards, while RuPay credit cards and credit lines are increasingly being integrated directly into UPI.