Digital payments to merchants across India climbed 19.6 per cent year-on-year to ₹11.73 lakh crore in July 2026, propelled by robust growth in UPI person-to-merchant (P2M) transactions and credit card spending, according to data compiled by Equirus Securities. The figure also marks a 5 per cent rise month-on-month from ₹11.17 lakh crore recorded in June 2026.

Key Developments

Merchant payments stood at ₹9.80 lakh crore in July 2025, making the year-on-year jump of nearly ₹2 lakh crore one of the sharper annual expansions in recent months. UPI-P2M and credit cards were the primary engines, posting year-on-year growth of 23.5 per cent and 7.4 per cent, respectively.

UPI-P2M transactions reached ₹9.066 lakh crore in July, commanding a 77.3 per cent share of total digital merchant payments — up 22 basis points from June and 243 basis points from the year-ago period. The sustained gain in UPI's share underscores the channel's deepening penetration at the point of sale.

Credit Card and Debit Card Trends

Credit card spending touched ₹2.081 lakh crore in July, a 3.4 per cent month-on-month increase, and accounted for 17.7 per cent of total digital merchant payments. The credit card base continued to expand, with cards in force rising by 1.267 million from the previous month to reach 122.9 million in July.

Debit card spending, by contrast, edged down 0.8 per cent year-on-year to ₹37,700 crore, even as it gained 7.4 per cent month-on-month — a divergence that analysts attribute to the accelerating shift toward UPI and credit instruments. Prepaid cards and wallets together logged ₹20,300 crore in July, registering a strong 41.1 per cent year-on-year jump and a 4.3 per cent month-on-month increase.

E-Commerce Dominates Credit Card Use

Online commerce continued to drive credit card activity, accounting for 63.6 per cent of total credit card spending in July, up marginally from 63.1 per cent in June. Average monthly e-commerce spending per credit card stood at ₹10,772, compared with ₹6,165 for point-of-sale transactions.

The average e-commerce transaction size was ₹4,301, nearly double the ₹2,579 average for physical point-of-sale purchases. Average monthly transactions per credit card also ticked up to 4.90 in July from 4.75 in June, indicating rising card engagement.

What This Signals

The data reflects a digital payments ecosystem that is both broadening and deepening. UPI's commanding share — and its continued year-on-year gains — suggests that the infrastructure built around the National Payments Corporation of India (NPCI) framework is still in an expansion phase rather than plateauing. Notably, the strong showing of prepaid cards and wallets, despite their smaller base, points to growing adoption in segments not yet fully served by UPI or credit cards.

With credit card issuance accelerating and e-commerce spending per card rising, the trajectory heading into the festive quarter looks constructive for India's broader digital economy.