India’s Wallet Goes Digital: Consumer spending in 2025 signals a cashless, experience-driven future

THEBUSINESSBYTES BUREAU

GURUGRAM, DECEMBER 12, 2025

India’s consumer spending landscape is undergoing a decisive transformation as digital payments move from convenience to default. A nation once dominated by cash transactions has rapidly embraced digital channels, powered by robust infrastructure, widespread smartphone adoption, affordable internet access and rising consumer trust. From neighbourhood grocery stores to large online marketplaces, digital payments are now firmly embedded in everyday spending habits.

Data from the Reserve Bank of India underscores the scale of this shift. In the first half of 2025, digital transactions accounted for an overwhelming 99.8 per cent of total transaction volume and 97.7 per cent of transaction value. At the heart of this evolution is the Unified Payments Interface (UPI), which processed 10,637 crore transactions amounting to ₹143.3 lakh crore during the same period. Industry projections indicate that UPI’s transaction value will grow at a CAGR of 14.7 per cent to reach ₹532.6 lakh crore by 2029, reflecting its central role in India’s payments ecosystem.

Credit cards continue to complement this growth, reinforcing consumer confidence in digital credit. As per RBI data for October 2025, India has over 114 million credit cards in circulation, a figure projected to double to nearly 200 million by FY30. The integration of RuPay credit cards with UPI has significantly expanded the everyday utility of credit, enabling consumers to use QR-based credit payments even for small-ticket purchases. This has translated into robust spending growth, with credit card spends rising 19.6 per cent year-on-year in October 2025 to ₹2.14 lakh crore, driven by festive demand and strong e-commerce sales.

Consumer behaviour is increasingly digital-first, particularly online. SBI Card insights reveal that the share of online spends in retail increased to 62.5 per cent in H1 FY26 from 58.4 per cent a year earlier, signalling that digital purchasing has become mainstream across both discretionary and essential categories. Indian consumers are emerging as true digital natives, seamlessly blending aspiration with access while adopting an omnichannel lifestyle.

Experience-led spending is leading the discretionary surge. Travel, hospitality and entertainment categories recorded strong momentum, with SBI Card’s Q2 FY26 data showing 79 per cent year-on-year growth in total spends across hotels, airlines, railways, travel agents, entertainment and restaurants. Online spends in these categories grew sharply, registering 111 per cent growth in Q1 FY26 and 125 per cent in Q2 FY26, reflecting sustained enthusiasm for travel and leisure experiences.

At the same time, lifestyle and durable goods spending is reflecting a hybrid consumption model. Categories such as consumer durables, apparel, jewellery and home furnishings witnessed healthy growth across both online and offline channels, indicating that consumers are increasingly channel-agnostic and informed in their purchase decisions.

Digital adoption is also accelerating in non-discretionary segments including groceries, utilities, healthcare, rentals and education. The rise of quick commerce and e-commerce platforms has further strengthened this trend, with steady online spend growth recorded across these essential categories.

A notable development is the rapid adoption of UPI-linked credit in Tier 2 and Tier 3 cities. SBI Card data shows that nearly three-fourths of UPI-active credit card customers and close to 79 per cent of UPI-credit spends originate from Tier 2 and beyond, highlighting deeper financial inclusion and the democratization of digital credit.

Taken together, these trends point to a clear reality: India’s consumption story is now digital-first, experience-driven and inclusive. With rising online transactions, expanding UPI-linked credit usage and growing comfort with digital payments across geographies, the country’s payment ecosystem is firmly positioned to power the next phase of modern consumption.