The Indian payments landscape has dramatically shifted in 2025. Unified Payments Interface (UPI) has not only disrupted cash but is also fundamentally changing how Indians interact with debit and credit cards. A much-asked question this year is: “Is UPI killing debit cards?” Let’s dive into the latest data and trends with a focus on UPI Credit Card vs Debit Card.
UPI: India’s Payment Powerhouse
- Transaction Volume: UPI processed 18.4 billion transactions in June 2025 alone, averaging 613 million daily transactions.
- Value: The monthly transaction value in June 2025 surpassed ₹24 trillion ($294 billion).
- Dominance: UPI now accounts for nearly 80% of all digital retail payments by volume in India, up from 73% in 2023.
- Growth Rate: UPI transaction volume surged 36% year-on-year in 2025, with value growth at 20%.
Debit Card Decline: The Numbers Speak
- Sharp Fall in Usage: Debit card swipes in India plummeted from 312 million in July 2022 to just 144 million in July 2024 — a more than 50% drop in two years.
- Overall Trends: Debit card transaction volume fell by a staggering 33% in FY2024 compared to FY2023; debit card spends dropped 18% year-over-year.
- Why the Decline?
- UPI replaced debit cards for most small and medium payments (P2P and P2M).
- Debit card rewards are less attractive than credit cards.
- UPI ATMs facilitate cardless cash withdrawals, making physical cards even less essential.
- Cost savings for banks by reducing debit card issuance and management.
UPI Credit Card Linkage: A Gamechanger
- UPI-Credit Card Integration: RuPay credit cards can now be linked to UPI. This means you can use your credit card like a debit card via QR payments, eliminating friction.
- Rapid Growth: In the first 7 months of FY25, UPI credit card transactions doubled year-on-year, reaching ₹638 billion ($7.4 billion). RuPay now powers half of all new credit cards issued in India as of June 2024.
- Market Share Shift:
- Credit cards’ share of digital payments fell to 21% in 2024 (down from 43% in 2018), almost entirely due to UPI’s rise.
- Debit card numbers are flatlining while UPI usage explodes.
- Consumer Behavior: Credit card rewards and buy-now-pay-later (BNPL) convenience are driving credit card transaction growth, but actual ‘card swipes’ are falling as usage shifts to UPI-based QR payments.
UPI vs Credit Card vs Debit Card: 2025 Cheat Sheet
| Feature | UPI | Credit Card | Debit Card |
| Source of Funds | Direct bank account | Credit line | Linked bank account |
| Rewards/Cashback | Limited, app-based | Strong offers, EMIs | Limited |
| Ease of Use | Instant, QR pay | Growing via QR/UPI | Declining at merchants |
| Security | UPI PIN, no card | Advanced security | PIN, risk of skimming |
| Consumer Preference | Urban & rural | Urban, aspirational | Falling rapidly |
| Growth Trajectory (2025) | 36% YoY (volume) | 21% YoY (transaction count) | -33% (volume) |
| Key Use Case | Micro, macro, P2P, P2M | High-value retail & online | ATM withdrawals, niche |
Why UPI Is Outpacing Debit Cards
- Convenience: No card needed – just a phone and an app.
- Universality: From small vendors to e-commerce, UPI is accepted everywhere.
- Cost: Zero merchant discount rate (MDR) for many merchants, driving acceptance everywhere.
- Innovation: Features like UPI Lite, UPI credit card linkage, and cardless ATMs expand UPI’s scope far beyond traditional cards.
Will Debit Cards Die Out Completely?
Not immediately. Debit cards are still used for ATM withdrawals and occasional online purchases, but their central role in daily payments is fast disappearing. UPI’s trajectory, supported by robust government and bank backing, means the decline of debit card usage will only accelerate.
Credit cards, meanwhile, are leveraging UPI’s infrastructure to reinvent themselves, especially RuPay-powered cards linked with UPI—blurring the lines between ‘card’ and ‘digital’ payments entirely.
Conclusion
UPI has not just killed cash—it’s squeezing out the debit card and rapidly redefining the battle of UPI Credit Card vs Debit Card in 2025.
Debit cards aren’t dead just yet, but UPI is making them nearly obsolete for most Indians. The future of digital payments is all about seamless, app-based, rewards-filled UPI experiences—and the humble debit card is rapidly losing its shine.
