Study Finds Credit Cards And EMI Financing Fuel Nearly One-Third Of India’s UPI Transactions

A study analyzing transactions from over 20,000 merchants found that nearly a third of domestic digital payment transactions in India are now fueled by credit, conducted via credit cards or EMI-based financing.

“Narendra Modi: 'AI must become an instrument for the common good, opening new avenues of progress for the Global South”

l'Opinion

The shift is happening alongside Reserve Bank of India data showing net financial savings of households fell to about 5.1% of GDP in FY24, while household debt reached about 41% of GDP by early 2025, according to estimates based on central bank data.

l'Opinion

The Phi Commerce study said that in 2024 nearly one-third of domestic digital transactions were credit-funded, and it described how credit options are increasingly integrated into everyday transactions through India’s Unified Payments Interface (UPI).

Rajesh Londhe, co-founder and head of payments at Phi Commerce, said integrating credit options directly into digital payment platforms has made borrowing smoother, adding, "Credit is no longer seen as a means reserved for emergencies or very large purchases."

Londhe also said the change is producing "a form of payment segmentation," with UPI used for frequent, small-value payments while credit instruments are more common for discretionary, higher-value purchases.

As digital credit expands, fintechs that help borrowers restructure debt say stress often emerges from overlapping obligations rather than a single loan.

Kunal Kishor Singh, head of marketing at ZAVO, said, "What stands out most in our recent data is not the size of the loans, but the reasons behind them," and he pointed to an internal review of more than 50,000 EMI-relief cases over the past year.

TechCrunch

That review found that 61% of cases were related to unsecured consumer exposure, including credit-card balance rollovers, short-term digital personal loans, and EMIs for durable consumer goods.

Singh said the "median distressed borrower on Zavo has four active commitments," and he added that 46% have total EMI outgoings exceeding 50% of their net monthly income.

He warned that when repayment obligations reach that threshold, even small disruptions such as salary payment delays or unexpected expenses can destabilize household finances, saying, "Default does not start because a borrower has taken out an irresponsible loan."

In India’s push to expand digital payments, Dilip Asbe, MD and CEO of the National Payments Corporation of India, said AI will be heavily involved in the next phase of UPI growth.

“In Delhi, 'France, like India, has reiterated its desire to open a "third way" freed from American and Chinese domination in AI,' according to Les Échos”

Touteleurope.eu

Asbe told TechCrunch in an interview at Mumbai Tech Week (MTW) 2026 that UPI has grown to over 750 million daily transactions and that the next phase aims to reach over a billion daily transactions.

He said, "AI will be used very effectively when we look at the next wave of UPI," and he linked AI to user growth, fraud prevention, and credit distribution.

Asbe also argued that AI-powered finance can be adopted with robust regulations, saying the system should have protection for users and mitigation for risk, and that if something goes wrong it should be able to look at the instructions and consent given by the user to an agent.

In parallel, TechCrunch reported that NPCI launched a voice assistant-based interactive system in 2023, and Asbe said adoption has not yet taken off while voice could become a critical component in the payment ecosystem.