UPI captures more of the market at cards' expense

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Key points

• (Catch all the Business News, Breaking News and Latest News Updates on The Economic Times.).
• Their share was additionally below the trailing 12-month average of concerning 19%.
• UPI market sharemerchant paymentsdigital payments in Indiatransaction volume growthcredit card trendsdigital merchant paymentsMerchant Discount Rate.
• While credit and debit cards are steadily losing ground, UPI is taking an increasingly bigger slice of India's digital merchant payments market.
• The Economic Times daily newspaper is available online now.

Nifty24, 175.6584.81. Gold (MCX) (Rs/10g.)156, 400.00-2596.0. The Economic Times daily newspaper is available online now. UPI's market share expands more at debit, credit cards' expense. ET OnlineLast Updated: Aug 29, 2026, 11: 44: 00 PM IST.

UPI now dominates India's digital merchant payments, capturing a significant market share. Credit and debit cards are steadily losing their previous positions in this sector. The digital payments market continues to expand, with UPI capturing much of this expansion. Proposed changes may introduce nominal charges on select higher-value UPI merchant transactions. Listen to this article in summarized format. Unlock AI Briefing and Premium Content. New Year Offer 24 Hours Left. Subscribe Now Already a member? Sign In.

While credit and debit cards are steadily losing ground, UPI is taking an increasingly bigger slice of India's digital merchant payments market. UPI accounted for a record 77.3% of person-to-merchant transactions in July, up from 74.9% a year earlier and 77.1% in June, TOI documented, citing a report by Equirus. The shift comes even as India's digital merchant payments market continues to expand, growing 19.6% year-on-year to ₹11.7 lakh crore in July. UPI's growing share suggests that the payment system is capturing much of the expansion in merchant transactions.

UPI completes 10 years, clocks almost 13, 000-fold rise in transaction volume Credit cards, in contrast, accounted for 17.7% of merchant payments in July, down from 19.8% a year earlier. Their share was additionally below the trailing 12-month average of concerning 19%. Live Events.

Debit cards have lost even more ground. As spending that was previously created directly through bank accounts increasingly shifts to UPI, their share of merchant payments fell to 3.2% in July from 3.9% a year earlier. The trend is visible throughout India's wider retail payments market too. Earlier this week, PTI documented, citing CareEdge Analytics & Advisory that UPI's share of retail payment transaction volumes rose from 73.6% in FY23 to 86.8% in the June quarter of FY27. With UPI becoming the dominant payment mode, the focus is now shifting from adoption to the sustainability of the ecosystem. CareEdge remarked proposed changes to the Merchant Discount Rate framework could allow targeted charges on select higher-value merchant transactions. While all person-to-person transactions would remain free, parliament earlier this month passed amendments to the Payment and Settlement Systems Act, 2007, allowing the administration to modify the zero-MDR framework for UPI.: UPI MDR explained: What potential charges above Rs 2, 000 payments on Paytm, GPay & other apps mean for you and merchants Consumers would continue to produce payments without transaction charges. A nominal MDR could instead apply to a limited set of higher-value merchant transactions above a certain threshold. While 67.2% of merchant transaction value is above ₹2, 000, careEdge remarked merchant payments account for 29% of total UPI transaction value. Based on FY26 data, this means regarding 19.5% of overall UPI transaction value could potentially fall within the proposed MDR threshold. The share of UPI merchant transactions above ₹2, 000 has risen from 15.1% in FY23 to 20.1% in the first quarter of FY27, expanding the pool of transactions that could potentially be covered by MDR. While allowing the bulk of everyday and person-to-person UPI payments to remain free, careEdge estimated that an MDR of 0.25-0.50% could create a potential gross revenue opportunity of ₹15, 000-30, 000 crore. Notably, the shift in market share, meanwhile, is clear: UPI's footprint is expanding while credit and debit cards are giving up ground in merchant payments. Add Now!

For now, UPI captures more of the market at cards' expense remains the part of the story worth watching, and further updates are likely as more details are confirmed.