Mumbai, Aug 29: India’s digital merchant payments market continued to grow in July, with the total value of transactions rising 19.6 per cent year-on-year to Rs 11.7 lakh crore. The latest data also shows a clear shift in consumer behaviour, with UPI strengthening its position as the preferred way to pay at shops and businesses.
According to a report by Equirus, UPI accounted for a record 77.3 per cent of person-to-merchant transactions in July 2026, up from 74.9 per cent during the same month last year. Its share also increased marginally from 77.1 per cent in June.
The growing use of UPI reflects how digital payments have become a routine part of everyday spending in India. Its easy access, quick processing and widespread acceptance have made it convenient for both consumers and merchants.
At the same time, traditional card payments are gradually losing ground. Credit cards accounted for 17.7 per cent of merchant transactions in July, compared with 19.8 per cent a year earlier. Their share was also below the trailing 12-month average of around 19 per cent.
Debit card usage saw a similar decline. Their share of merchant payments fell to 3.2 per cent in July, from 3.9 per cent in the corresponding month last year.
The changing payment mix suggests that consumers are increasingly choosing to pay directly from their bank accounts through UPI rather than using debit or credit cards for everyday purchases.
For small businesses and larger retailers alike, the growing popularity of UPI has made accepting digital payments easier and more accessible. Customers can complete transactions using their mobile phones, while merchants can receive payments without depending entirely on traditional card infrastructure.
The trend also highlights the changing nature of India’s digital economy. As more consumers become comfortable with mobile-based payments, UPI is moving beyond being an alternative payment option and becoming a central part of everyday commerce.
The continued expansion of digital merchant payments is expected to support India’s broader shift towards a less-cash economy, while increasing competition among different payment methods and encouraging innovation in the country’s financial technology sector.