India's spending habits: UPI dominates digital payments, credit cards witness high growth

India's digital payments, led by UPI, soared in the latter half of 2023 as compared to the same period in 2022, with a 56% surge in transaction volumes to 65.77 billion.

According to a report by Worldline, a leading global payment services provider, the value of these UPI transactions also surged by 44% to 99.68 trillion rupees.

Despite the prevalence of UPI, traditional cards also continued to witness a growth. The total number of cards in circulation increased by a modest 6% to reach 1.384 billion.

Notably, credit cards saw the highest growth rate at 21%, surpassing both debit cards, which grew by just 2%, and prepaid cards, which saw a 13% increase.

In January 2022, Person-to-merchant (P2M) transactions accounted for 40.3 per cent of all UPI transactions compared to 57.5 per cent in June 2023 and this percentage is likely to grow further, it said.

Another indicator that prognosticates the future of UPI growth and particularly UPI P2M transactions is the average ticket size (ATS), it said, adding, ATS for UPI Person-to-merchant transactions which was Rs 885 in January 2022 has reduced to Rs 653 in June 2023.

This indicates that UPI is now being increasingly used for micro transactions, indicating a further entrenchment of UPI.

With regard to Electronic Toll Collection (ETC), the report said, it has really changed how "we pay for tolls on the country's roads and now increasingly at parking plazas among other use cases." Drivers across the country can testify how easier it has made driving on roads and this steady adoption is reflected in the numbers, it said.

To start with, it said, the number of tags issued has grown from 45.97 million in January 2022 to 71.92 million in June 2023, a 56.5 per cent growth.

In terms of volume, it said, transactions in H123 were 1.85 billion compared to 1.57 billion in H122, a 17.6 per cent growth while the value of ETC transactions in H123 was Rs 30,340 crore, a 25.3 per cent increase when compared to H122.