UPI vs cards: A clear divide emerges in Indian spending behaviour

Indians are increasingly mixing traditional convenience with modern credit habits when shopping online. New findings by consulting firm Kearney and Amazon Pay show that while most consumers rely on cash and UPI for everyday essentials, credit cards take centrestage for high-value purchases such as smartphones, furniture, and large appliances, ToI reported on October 8.

The data reflects a clear divide in consumer payment behaviour. For groceries, personal care or household essentials, the report found that UPI remains the preferred choice due to its speed and simplicity. But when the shopping basket becomes heavier -- literally and financially -- credit cards step in.

“High-value categories such as furniture and durables continue to attract a high preference for cards, more notably credit cards, and other methods including prepaid cards, BNPL and net banking,” the report noted.

Rewards and cashback offers are among the strongest motivators driving the use of credit cards, Vikas Bansal, CEO of Amazon Pay India, told ToI. “The sweet spot is Rs 1,000 for credit cards and BNPL,” he said, referring to Buy Now, Pay Later schemes.

According to him, while UPI transactions dominate in terms of volume, the total value of payments tends to be higher for credit cards and BNPL.

This trend has become more visible during the ongoing festive season, which began with Navratri on 22 September. Industry executives have observed a surge in credit-based payments as consumers take advantage of online sale events and attractive EMI offers.

Platforms such as Amazon and Flipkart have rolled out special promotions, with Amazon’s partnership with SBI offering exclusive credit card-based EMI deals that have drawn strong customer participation.

The growing appeal of co-branded credit cards (CBCCs) is also shaping this shift. Designed specifically for digital marketplaces, these cards offer targeted rewards and deeper integration with online shopping platforms.

As more shoppers migrate online, such products are broadening access to credit-based payment options and bringing new consumers into the fold.

Much of this change is being led by India’s younger, income-earning population. The report highlights that millennials and Gen Z professionals are adopting credit cards early in their financial lives -- often soon after securing their first jobs.

Many cite credit cards as a tool for managing expenses, earning rewards, and establishing a strong credit profile. “Whether they’ve been working for two years or 20, many professionals recall turning to credit cards early on to manage expenses,” the report said.

Digital payments overall continue to expand across the country. In FY25, transaction volumes in urban India rose by 35%, with top metros such as Delhi, Mumbai and Bengaluru leading adoption. Yet, the trend is no longer confined to big cities.

Mid-sized urban centres like Lucknow, Jaipur and Ahmedabad are quickly catching up, showing both high transaction counts and growing openness to new payment technologies.