India’s Digital Merchant Payments Reach ₹11.73 Lakh Crore in July as UPI Captures 77.3% Share

India’s transition towards digital retail payments continued to deepen in July 2026, with the total value of digital payments made to merchants rising 19.6 per cent year-on-year to ₹11.73 lakh crore.

The increase was driven overwhelmingly by the Unified Payments Interface, which accounted for 77.3 per cent of the value of digital merchant payments during the month, further widening its lead over credit cards, debit cards and prepaid payment instruments.

The July total was up from approximately ₹9.80 lakh crore in July 2025 and was also around 5 per cent higher than the ₹11.17 lakh crore recorded in June 2026.

The figures illustrate how rapidly UPI is becoming the principal payment mechanism for everyday commerce in India, particularly for direct bank-account payments at shops, restaurants, online platforms and millions of small merchants accepting QR-based payments.

UPI Merchant Payments Cross ₹9 Lakh Crore

Person-to-merchant transactions conducted through UPI reached approximately ₹9.066 lakh crore in July 2026, an increase of 23.5 per cent from a year earlier.

UPI consequently accounted for 77.3 per cent of the value of digital merchant payments covered by the data, compared with 74.9 per cent in July 2025.

Its market share increased by approximately 243 basis points year-on-year and by 22 basis points compared with June 2026.

The figures suggest that UPI continues to gain share even after reaching enormous scale.

Rather than merely adding new users, the payment system is increasingly capturing transactions that might previously have been made using debit cards, cash or other digital instruments.

Overall UPI Transactions Hit Record Levels

The growth in merchant payments forms part of a much larger expansion of the UPI ecosystem.

Official Government of India data show that UPI processed approximately 2,365.8 crore transactions in July 2026, worth nearly ₹29.88 lakh crore.

Both measures underline the scale that the platform has reached a decade after its introduction.

The number of banks participating in UPI had risen to 741 by July 2026, compared with just 21 banks at the system’s launch in 2016.

The ₹9.066 lakh crore in merchant transactions represented roughly 30 per cent of the total value flowing through UPI during July, with the remainder including person-to-person transfers and other eligible transactions.

This distinction is significant because UPI has evolved simultaneously as a system for transferring money between individuals and as the dominant digital acceptance infrastructure for merchants.

Credit Cards Remain Important but Lose Market Share

Credit cards remained the second-largest digital merchant payment instrument during July.

Total credit-card expenditure reached approximately ₹2.081 lakh crore, increasing 7.4 per cent year-on-year and 3.4 per cent from June.

However, because overall digital merchant payments and UPI transactions grew much faster, the share of credit cards in merchant-payment value declined to 17.7 per cent, compared with approximately 19.8 per cent a year earlier.

This does not mean that India’s credit-card market is shrinking.

On the contrary, the number of credit cards in circulation continued to expand strongly.

RBI data showed that issuers added around 1.26 million cards during July, taking the outstanding credit-card base to approximately 122.9 million cards.

The number of cards was nearly 10 per cent higher than a year earlier.

The emerging picture is therefore not one of declining credit-card usage, but of UPI expanding considerably faster.

Consumers Are Using Credit Cards More Frequently

Another notable development is that credit-card transaction volumes are growing faster than the amount consumers are spending.

Credit-card transaction volumes increased approximately 24.5 per cent year-on-year to 605.3 million transactions in July, while spending rose only 7.4 per cent.

As a result, the average value of an individual credit-card transaction declined to around ₹3,440, compared with nearly ₹3,987 a year earlier.

This suggests that cards are increasingly being used for smaller purchases rather than being restricted primarily to larger discretionary spending.

Nevertheless, UPI remains particularly strong in low- and medium-value transactions because users can pay directly from their bank accounts without requiring a physical card or conventional point-of-sale terminal.

Online Commerce Drives Credit-Card Spending

E-commerce continues to play an important role in sustaining credit-card usage.

Around 63.6 per cent of credit-card spending during July occurred through online or e-commerce channels, compared with 63.1 per cent in June.

Average monthly online spending per credit card was approximately ₹10,772, while average point-of-sale expenditure stood at around ₹6,165.

The average e-commerce credit-card transaction was also considerably larger, at about ₹4,301, compared with approximately ₹2,579 for point-of-sale transactions.

Credit cards therefore continue to occupy an important position in higher-value online purchases, travel, consumer electronics, subscriptions and transactions where users seek short-term credit or rewards.

UPI and credit cards are consequently developing increasingly distinct roles rather than one payment instrument completely replacing the other.

Debit Cards Continue to Lose Ground

Debit cards have been affected much more sharply by the growth of UPI.

Debit-card merchant expenditure stood at approximately ₹37,700 crore in July 2026.

Although spending increased 7.4 per cent compared with June, it was 0.8 per cent lower than a year earlier.

Debit cards consequently represented only about 3.2 per cent of digital merchant-payment value, down from approximately 3.9 per cent in July 2025.

The reason is relatively straightforward.

Both debit cards and UPI generally allow consumers to spend funds directly from their bank accounts.

UPI, however, eliminates the requirement to carry a physical card and enables payments through QR codes, mobile numbers, UPI IDs and increasingly other forms of digital authentication.

For small merchants, accepting UPI can also be substantially easier than deploying and maintaining conventional card-acceptance infrastructure.

As a result, UPI has increasingly assumed many of the functions that debit cards once performed at physical merchant locations.

Prepaid Cards and Wallets Record Fast Growth From Smaller Base

Prepaid payment instruments remain a relatively small part of India’s overall merchant-payment ecosystem but recorded strong growth during July.

Prepaid cards accounted for roughly ₹6,600 crore, while digital-wallet transactions contributed approximately ₹13,700 crore.

Together, prepaid cards and wallets generated around ₹20,300 crore in spending, representing growth of approximately 41.1 per cent year-on-year and 4.3 per cent month-on-month.

Their combined share remains below 2 per cent of total digital merchant-payment value, illustrating just how heavily the ecosystem is now concentrated around UPI and credit cards.

QR Codes Have Changed Merchant Acceptance

One of the most important reasons for UPI’s growth has been the extraordinary expansion of QR-based payment acceptance.

Traditional card payments generally require merchants to obtain a point-of-sale machine or other card-processing infrastructure.

UPI substantially changed this model.

A merchant can accept digital payments using a printed or displayed QR code linked to a bank account, drastically lowering the technical and physical infrastructure required for digital acceptance.

This has allowed digital payments to spread well beyond supermarkets, organised retail chains and established businesses.

Small grocery stores, roadside vendors, taxis, local service providers, restaurants and individual entrepreneurs can all participate in the same interoperable payment network.

This low-cost acceptance model has played an important role in bringing India’s enormous informal and small-business economy into the digital-payment ecosystem.

UPI Now Accounts for 84% of India’s Digital Payment Volume

The expansion of merchant payments is part of a much wider structural shift in India’s payment system.

Government data show that UPI accounted for approximately 84 per cent of India’s digital payment transaction volume during FY2025-26.

During that financial year, UPI processed approximately 24,162 crore transactions worth ₹314 lakh crore.

The platform’s annual transaction value has increased from only around ₹0.07 lakh crore in FY2016-17.

The scale illustrates the transformation of UPI from a new bank-transfer platform into a core component of India’s national payments infrastructure.

UPI’s Growth Goes Beyond Major Cities

Another significant aspect of UPI adoption has been its ability to penetrate beyond India’s largest metropolitan areas.

QR-based acceptance does not require expensive infrastructure, while smartphones and inexpensive mobile-data services have made digital payments accessible across a much wider section of the population.

UPI also provides interoperability.

A customer using one bank or payment application can normally make a payment to a merchant using another participating bank or application without requiring both parties to belong to the same closed network.

That interoperability has helped avoid the fragmented payment ecosystems seen in many countries where individual wallets or banks operate largely within separate platforms.

Credit on UPI Could Blur the Divide Further

The distinction between UPI and credit cards is also becoming less rigid.

India has gradually expanded the ability to link certain credit products, including eligible RuPay credit cards and credit lines, with UPI.

This allows consumers to access credit while paying through the familiar UPI interface.

Such integration could eventually change the competitive relationship between traditional credit cards and UPI.

Instead of consumers having to choose between card-based credit and account-based UPI, credit itself can increasingly be delivered through the UPI payment rail.

That development could become one of the most important next stages in India’s payments evolution.

Merchant Payments Are Becoming the Core of UPI’s Next Phase

During UPI’s early growth period, person-to-person money transfers played a particularly prominent role.

The continued expansion of merchant payments shows that the system is increasingly embedded in routine commercial activity.

In July alone, ₹9.066 lakh crore flowed through UPI person-to-merchant transactions, demonstrating that the platform is no longer merely an alternative way to transfer funds between individuals.

It has become fundamental retail-payment infrastructure.

The simultaneous decline in debit-card share provides perhaps the clearest evidence of this structural transition.

Consumers are not simply replacing cash with digital payments. Within digital payments themselves, they are increasingly choosing UPI as the default mechanism for spending money directly from their bank accounts.

India’s Digital Payment Transformation Continues

The rise of digital merchant payments to ₹11.73 lakh crore in July 2026, combined with UPI’s 77.3 per cent share, represents another milestone in India’s rapidly changing payments landscape.

UPI merchant payments are growing faster than the overall market, credit cards continue to expand but are losing relative share, while debit cards are being steadily displaced from many everyday payment situations.

At the same time, overall UPI activity has reached record levels, with nearly ₹29.88 lakh crore passing through the network during July.

The numbers point towards an increasingly mature digital-payments ecosystem in which different instruments are finding distinct roles: UPI dominating direct bank-account payments, credit cards retaining strength in credit-led and higher-value spending, and debit cards becoming progressively less important for merchant transactions.

India’s payment transformation has therefore moved beyond the initial question of whether consumers will adopt digital payments. The emerging question is increasingly which digital payment rail they will choose — and at present, UPI is widening its lead.

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