by Suman Gupta
- UPI responsible for 65% of total transactions
- Parents adopt EMI payments for tuition fees incrementally
- Government and utility payments riding UPI wave at 75%
MUMBAI : April 2025: Nearly one-third of all domestic digital payment transactions in 2024 were credit-driven, facilitated through credit cards or interest-bearing EMIs (equated monthly instalments), according to a report that analysed transaction data from over 20,000 merchants. These findings come amid tightening regulatory measures aimed at curbing rising consumer credit and growing household debt, which is increasingly fuelling consumption rather than asset creation.
The report – “How India Pays” – by digital payments fintech Phi Commerce, also noted how UPI has become a transformational product in digital payments responsible for 65% of total transactions. While UPI dominates small and mid-value transactions, credit cards and EMIs are increasingly used for big-ticket purchases, with education, healthcare, and auto ancillary sectors seeing strong growth in digital credit adoption, the report said. Festive shopping, school admissions, and seasonal trends drive spikes in credit usage, showing that consumers rely on short-term credit for high-spend periods.
“India’s digital payments evolution is reshaping financial possibilities—empowering consumers to spend smarter, plan better, and dream bigger. As UPI and flexible credit options become mainstream, the future belongs to those who leverage these tools responsibly to drive inclusive growth and financial resilience,” said Rajesh Londhe, Co-founder and Head of Payments, Phi Commerce.
At the core of this behavioural shift in payments is UPI, which has become the default payment mode for everyday transactions, according to the report. Its widespread adoption signifies consumers’ preference for speed, ease, and instant settlements, making it the primary choice for retail, food services, and government transactions. However, beyond daily spending, a notable rise in credit-based digital payments—via credit cards and EMIs—suggests a growing willingness to defer costs and manage cash flow strategically.
Consumers today are more open to financing their spending rather than making one-time payments. This is particularly evident in education (10%), healthcare (15%) and auto ancillary (15%), where high-value purchases are increasingly made via EMIs and structured credit options. The reliance on EMI plans for school fees, medical expenses, and large online purchases reflects a shift in financial behaviour—from outright affordability to manageable, phased spending.
Seasonality also plays a crucial role in shaping consumer spending patterns. Retail, education, and healthcare transactions peak during specific months, highlighting periodic financial planning by consumers. For instance, spending surges during festive shopping seasons, school admission periods, and insurance renewal cycles, suggesting that consumers strategically allocate resources based on need rather than impulse.
Another significant trend is most recurring payments (75%) to government/utilities has moved to UPI AutoPay mode. This shift indicates greater financial discipline and trust in digital systems, reducing the risk of missed payments. Overall, Indian consumers are moving toward a more structured, planned, and digital-first approach to spending. While UPI dominates everyday transactions, the rising comfort with credit and instalment-based payments signals a deeper financial evolution—one where affordability is no longer about how much cash is on hand, but about how well expenses are managed.
The report has also outlined key digital payment trends in select sectors – education, retail, healthcare, foods and restaurants, e-commerce and automotive. Please refer to the report attached for a detailed breakdown.
About Phi Commerce: Digital payments company Phi Commerce offers omnichannel payment solutions to enterprises that enable them smooth and flexible payments across all consumer touchpoints – browser, mobile, in-store and remote. A payment aggregator and payment gateway (PAPG) licence holder from the Reserve Bank of India, Phi Commerce offers a unified omni-channel digital payment platform catering to both B2B and B2C payment requirements for businesses worldwide. The company, backed by investors like Beenext Singapore and Opus Ventures, has offices in Mumbai, Pune, and Singapore, with plans afoot to expand into Southeast Asia, Japan and Middle East. Phi Commerce had won the “Best in Class Payment Startup in Established Fintech Category” at the 2024 Assocham Annual Fintech Excellence Awards
