How did you make payment this Diwali? UPI broke all records, but the ‘king’ of online shopping is someone else!

The festive season is over, and now is the time of accounting as to how and how much the country spent this time. This Diwali, one thing became very clear – we Indians preferred scanning QR codes from our phones instead of taking cash out of our pockets. Unified Payments Interface i.e. UPI has once again proved that it is the real king of small payments.

From tea-samosas to every small purchase, UPI is booming

Statistics show that from Dhanteras to Diwali this year, an average of 73.7 crore payments were made through UPI every day. This figure is 30% more than last year and shows that it is no longer possible for anyone to catch up with the pace of UPI. In the last three-four years, the use of UPI has increased three times.

However, interestingly, the total amount of payments increased by only 2.7%. This shows that now we are taking out our phones for every small payment, from buying tea-samosas to buying vegetables, while for big purchases we are adopting some other method.

Credit card turns out to be the ‘juggernaut’ of online shopping

But when it comes to big shopping, especially online, the tables turn. Credit card has emerged as the real ‘king’ here. The lure of huge discounts, EMI options and cashback forced people to use credit cards.

This Diwali, in online shopping, credit card payments increased by 22%, while debit card payments decreased by 24%. This is a clear indication that people are relying more on credit cards instead of debit cards for big online deals. Even at shops (offline) the credit card magic worked and recorded the fastest growth in three years.

Why is the shine of debit cards and wallets decreasing?

Debit cards and mobile wallets were seen lagging behind in this entire story. There was a decline in both the number and value of debit card payments at shops. At the same time, the biggest decline was seen in prepaid methods like wallet and gift cards.

The simple reason for this is UPI. When you can pay anyone by scanning a QR code directly from your bank account, who needs the hassle of first adding money to the wallet and then making the payment! UPI has eliminated this extra step.

Will this phase of expenditure continue further?

The festival is over, but this phase of spending probably won’t stop yet. The government hopes that due to the changes made in GST rates, people’s spending will remain the same in future also. Union Minister Ashwini Vaishnav said that this year the total consumption may increase by more than 10%, which means people can spend approximately Rs 20 lakh crore additional.