Report: Buyers Favor UPI for Everyday Purchases and Cards for Major Transactions
Indians buyers are increasingly turning to digital payment methods for their shopping needs, with a notable preference for cash and UPI for everyday purchases. However, when it comes to high-value items like smartphones and furniture, credit cards take the lead, according to a recent report by Kearney and Amazon Pay. The report highlights the growing trend of online shopping, especially during festive seasons, and the rising popularity of credit-based payment options among younger consumers.
Shift in Payment Preferences
The report reveals that while UPI remains a popular choice for everyday transactions, credit cards are favored for larger purchases. This trend is particularly evident in categories such as furniture and electronics, where consumers are more inclined to use credit cards, prepaid cards, and other payment methods like Buy Now Pay Later (BNPL) and net banking. Vikas Bansal, CEO of Amazon Pay India, noted that the sweet spot for credit card usage lies around ₹1,000, which aligns with the spending patterns observed in various categories. Although UPI transactions are more frequent, the value of purchases made through credit cards and BNPL options tends to be higher.
Festive Season Boost
The festive season, which began with Navratri on September 22, has seen a significant increase in credit card transactions. E-commerce platforms like Amazon and Flipkart have played a crucial role in this surge, offering various promotions and sales events that encourage online shopping. Many consumers have taken advantage of credit card EMI offers, particularly from banks like SBI, to facilitate their purchases. This shift towards online shopping during the festive period has contributed to a notable rise in the use of credit-based payment instruments.
Emerging Trends Among Younger Consumers
The report also highlights the growing adoption of credit cards among younger generations, particularly Gen Z and millennials. Many young professionals are applying for credit cards shortly after starting their first jobs, recognizing the benefits of managing expenses and building a strong credit profile. This trend is indicative of a broader shift in consumer behavior, as more individuals seek payment solutions that offer value within their preferred digital marketplaces. Co-branded credit cards tailored for e-commerce are becoming increasingly popular, further expanding the reach of credit card usage.
Digital Payment Growth Across India
Overall, digital payment volumes in urban India have surged by 35% in FY25. While major metropolitan areas lead in digital payment adoption, cities such as Lucknow, Jaipur, and Ahmedabad are quickly catching up. These regions are demonstrating high transaction volumes and a strong willingness to embrace emerging payment methods. As more consumers migrate online and explore various payment options, the landscape of digital transactions in India continues to evolve, reflecting changing preferences and technological advancements.
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