New Delhi [India], October 31 : Unified Payments Interface (UPI) has emerged as the most preferred mode of payment during the festive season, reflecting strong consumer spending and a revival in demand, according to a report by Bank of Baroda.
The report noted that the value of UPI transactions rose sharply to Rs 17.8 lakh crore during the festive period, compared to Rs 15.1 lakh crore in the same period last year. The increase shows how digital payments continue to drive consumption patterns, especially during major festivals like Dussehra and Diwali.
In September 2025, UPI recorded a 2.6 per cent month-on-month increase in value, marking steady growth in digital transactions. Alongside UPI, debit card usage also increased, with payments rising to Rs 65,395 crore during the festive period, up from Rs 27,566 crore the previous year. The report noted that while UPI remains the dominant choice, debit cards saw renewed activity this year, breaking a trend of declining usage in past periods.
Credit card transactions, on the other hand, showed signs of restraint, suggesting that consumers preferred direct digital and debit-based payments for festive purchases. The combined data from these payment modes, amounting to Rs 18.8 lakh crore, points to an upbeat trend in retail transactions, seen as an early sign of consumption revival in the ongoing quarter.
In terms of average spending per transaction, the report highlighted that debit cards led with Rs 8,084 per transaction, compared to Rs 1,052 for UPI and Rs 1,932 for credit cards. This suggests that UPI remains the go-to choice for small-and mid-value purchases, while debit cards continue to serve higher-value payments.
Bank of Baroda's category-wise data showed that in September 2025, spending increased sharply across online marketplaces, apparel outlets, electronic shops, beauty and barber establishments, and liquor shops. These categories recorded double-digit year-on-year growth, signalling strong festival-linked demand and the likely impact of recent GST rate cuts.
The bank's analysis, which adjusted for the number of festival days each year, found that the rise in transaction volumes mirrors an improvement in consumption demand. The report said that structural factors such as income tax benefits announced in the budget and the expectation of GST cuts have encouraged higher household spending.
The report concluded that the current trend points toward a buoyant private consumption outlook for the second quarter. "We expect private consumption demand to report a buoyant print in Q2. The trend will also persist in Q3," the report noted.
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