India’s digital payments landscape is moving beyond UPI’s default dominance. Consumers are now making deliberate choices about how they pay, depending on what they are buying and when, according to Phi Commerce’s How India Pays 2025-26 report, based on transaction data from 20,000 merchants across eight sectors.
UPI remains the most preferred mode for speed and convenience, inching up from 65% of digital transactions in 2024 to 67% in 2025. Cards and net banking also gained share, rising from 10% to 14% and 3% to 5%, respectively.
Credit shift
The most striking shift, however, is the drop in equated monthly instalments (EMIs), whose share halved from 20% to 10% between 2024 and 2025.
This does not necessarily signal a retreat from credit. Instead, it points to a shift toward more flexible, split-pay options that offer lower costs and greater convenience. In other words, credit is evolving rather than disappearing.
On a sectoral basis, UPI dominates as the preferred mode across most categories such as education (88%), auto ancillary (71%), food and beverages (68%), healthcare and e-commerce (65% each), where speed and convenience are key.
Cards emerge as a strong second choice across some sectors, most strikingly in retail where they account for 72% of transactions, reflecting their role in higher-value, discretionary purchases.
EMIs, meanwhile, are not confined to big-ticket gadgets alone. While electronics sees the EMI share at 35%, government and utilities is even higher at 37%, indicating consumers are spreading out large, unavoidable utility payments, not just aspirational purchases.
Prime time
Transaction timing adds another layer to this shift. Retail, e-commerce, and electronics— key discretionary activities— all peak between 8 PM and 11 PM, marking a clear evening window for high-value retail spending.
Essential payments, on the other hand, follow a more predictable pattern where utilities are settled in the early morning, meals paid for over lunch, and healthcare attended to in the late afternoon.
The report also points to sector-specific spikes in activity across the year. Education payments peak in June during admission cycles, while food and beverage transactions rise in May, coinciding with higher summer consumption.
E-commerce sees its highest activity in August, likely reflecting pre-festive sales, while retail peaks in May. These patterns suggest that while seasonality plays a role, it varies significantly by sector.