India’s digital economy reached new heights this festive season as Unified Payments Interface (UPI) emerged as the most preferred mode of payment, recording transactions worth $200 billion. The Bank of Baroda report revealed a sharp jump from last year’s $170 billion, signaling strong consumer confidence and widespread digital adoption during the Dussehra and Diwali shopping period.
According to the data, UPI transaction values rose 2.6% month-on-month in September 2025, underscoring its role as the backbone of India’s cashless ecosystem. Debit card transactions also saw impressive momentum, climbing to $7.37 billion, up from $3.11 billion a year earlier — reflecting a rebound in card-based spending after a long digital-first trend.
Interestingly, while debit cards witnessed this revival, credit card spending remained muted, pointing to a growing consumer preference for direct payments and lower dependence on credit. Overall, combined digital and card transactions hit $211 billion, underlining a notable recovery in retail consumption across categories such as e-commerce, electronics, apparel, grooming, and liquor.
The report highlighted that average spending per transaction was highest on debit cards at around $91, followed by credit cards at $22, and UPI at $12, demonstrating UPI’s widespread use for small to mid-value purchases. This shift signifies how everyday payments — from groceries to festive gifting — are increasingly powered by UPI.
Experts attributed this surge to multiple factors, including GST rate reductions, income tax incentives, and rising disposable incomes, which collectively encouraged festive spending. With the digital infrastructure now deeply entrenched in urban and semi-urban markets, UPI’s dominance continues to redefine how India spends during its peak shopping seasons.
Bank of Baroda’s report concluded that private consumption is expected to remain strong in the second and third quarters of FY26, driven by continued demand and seamless digital payment accessibility. The findings reaffirm that India’s journey toward a cashless economy is not just steady but accelerating — with UPI firmly at its center.
