India’s debit card transactions fall but credit card spends rise further

India’s debit card transactions fall but credit card spends rise further
  • Debit card transactions in H1 2023 (January to June) fell to 1.379 billion, marking a sharp 28% decrease from H1 2022.
  • Credit card transactions at PoS terminals recorded a 30.5% growth white debit card transactions fell 11.9%.
  • The volume of UPI transactions doubled from 4.6 billion transactions for this period in 2022.
A look at India’s spending pattern in the first half of 2023 (January to June), reveals an interesting trend. Debit card transactions in this period fell sharply to 1.379 billion, marking a 28% decrease from the same period in 2022. On the other hand, as revealed by a report compiled by Worldline, a payment and transaction services company, credit card transactions surged to 1.550 billion, reflecting a significant increase of 19.6% compared to H1 2022. The India Digital Payments Report H1 2023 also says that this trend is observed in the transaction values too.

The debit card transactions appear to have been impacted by the rise in Unified Payments Interface or UPI transactions. However,credit card transactions, often used for high-value payments, have continued to increase.

Credit card and UPI preferred at PoS terminals

In H1 2023 as compared to H1 2022, credit card transactions at point of sales (PoS) terminals amounted to ₹2.95 trillion (₹2,95,000 crore), showing robust growth of 30.5%, whereas debit card transactions were valued at ₹2.13 trillion(₹2,13,000 crore), marking an 11.9% decrease.

As stated, the growth of UPI is the main reason why debit card transactions have fallen as people now prefer to use their phones to pay rather than swipe a debit card for practically the same result.
However, payment through credit cards has a different result – one which gives the user a free grace period to pay or go for an instalment option. Plus, as mentioned before, credit card is the preferred mode for large ticket transactions.

The rise and rise of UPI

UPI has maintained its supremacy as the leading payment channel in India, overshadowing all other available payment methods in 2023 again. The volume of UPI transactions witnessed a significant surge (more than 2X) from 4.6 billion transactions in January 2022 to 9.3 billion in June 2023.

Concurrently, the transaction's overall worth followed a similar upward trend, moving from ₹8.3 trillion (₹8,30,000 crore) in January 2022 to nearly doubling to ₹14.7 trillion (₹14,70,000 crore ) in June 2023. This growth can be attributed to the widespread acceptance of UPI for various personal and payment transactions, both from the user's perspective and that of merchants. Furthermore, UPI has made substantial inroads into rural India.

Comparing H1 2023 to H1 2022, the volume of UPI transactions has surged by an impressive 62%, increasing from 31.95 billion to 51.91 billion.

Payments through mobile apps on the rise

The first half of 2023 has seen payments through phone apps shifting gears further. A significant portion of these growing transactions were UPI-based, but they encompassed various payment methods using bank accounts and more. During this period, the number of mobile transactions amounted to 52.15 billion, a 55.4% increase compared to the 33.55 billion recorded in HI 2022.