India shifts to context-driven payments; credit now powers everyday spending: reports by Phi Commerce

MUMBAI, India, May 4, 2026 /PRNewswire/ -- India's digital payments story is no longer defined by a single dominant method, but by context, where the choice of how to pay is increasingly driven by ticket size, urgency, and intent. While UPI continues to power most everyday transactions, new data from Phi Commerce's How India Pays 2025-26 report shows that consumers are actively switching instruments based on need, with credit cards and EMIs no longer limited to big purchases but increasingly used for routine and recurring expenses, including categories like utilities and essential services.

This shift is most visible in sectors that were traditionally considered high-friction and dependent on bank-led payments, according to one of the largest gateway-level datasets. In education, UPI now accounts for 88% of transactions, replacing the earlier dominance of net banking. Similarly, in healthcare, 72% of payments are made via UPI, indicating that even high-value hospital bills are now being settled instantly. These changes reflect a significant evolution in consumer trust, with UPI emerging as a reliable infrastructure not just for convenience, but for critical, high-value payments.

At the same time, the data points to a growing role of structured credit in managing both aspiration and necessity. In government and utility payments, EMIs now account for 34% of transactions, highlighting a structural shift toward consumers increasingly using financing options, even for essential expenses. In the electronics category, EMIs contribute to 36% of purchases, reinforcing their role as a key affordability tool. Together, these trends indicate that credit is no longer episodic but integrated into how consumers manage cash flows and spending cycles.

Commenting on the findings, Rajesh Londhe, co-founder and head of payments, Phi Commerce, said: "What we are seeing is a clear shift from default-driven to decision-driven payment behaviour in India. Consumers are no longer relying on a single method, such as UPI, for all transactions. Instead, they are actively choosing instruments based on context, using UPI for speed and convenience, while increasingly turning to credit cards and EMIs for planned and even routine expenses. Credit is no longer confined to big-ticket purchases; it is becoming embedded in everyday spending decisions."

The report also highlights a distinct 'time-of-day economy' influencing payment behaviour. UPI dominates high-frequency daytime transactions, particularly in categories such as food and beverages, which see peak volumes during midday. However, evenings see a decisive shift. During the 2000 hours to 2300 hours window, credit cards account for 72% of high-value retail transactions, as consumers opt for rewards, flexibility, and deferred payment options. This divergence underscores how payment choices are increasingly aligned with intent, daytime speed, and financial optimisation later in the evening.

Across sectors, the findings reinforce that India is now 'digital-first, but not digital-only'. Consumers are no longer defaulting to a single payment mode; instead, they are building a toolkit approach, using UPI for immediacy, credit for flexibility, and instruments such as EMIs and vouchers for targeted use cases. This behavioural shift is also influencing how businesses approach payments, with merchants increasingly offering multiple payment options to align with consumer intent and maximise conversion rates.

"As India's payments ecosystem matures, the competitive advantage will lie with businesses that can align payment options with context. The ability to offer the right instrument at the right moment, whether for speed, affordability, or rewards, is emerging as a key driver of both customer experience and transaction success," Londhe added.

Notes to Editor:

This report is based on a comprehensive analysis of omnichannel digital transaction data processed through the Phi Commerce payment gateway during the financial year 2025-26. The study draws insights from over 20,000+ merchants across India, spanning sectors including retail, e-commerce, healthcare, education, utilities, auto ancillary, food & beverages, and electronics. It analyses transaction patterns across key payment modes, including UPI, credit and debit cards, net banking, EMIs, wallets, and digital vouchers.

About Phi Commerce

Digital payments company Phi Commerce offers omnichannel payment solutions to enterprises that enable them to make smooth and flexible payments across all consumer touchpoints - browser, mobile, in-store and remote. A payment aggregator and payment gateway (PAPG) final licence holder with the Reserve Bank of India, Phi Commerce offers a unified omni-channel digital payment platform that caters to both B2B and B2C payment requirements for businesses worldwide. The company, backed by investors like Beenext Singapore and Opus Ventures, has offices in Mumbai, Pune, and Singapore, with plans afoot to expand into Southeast Asia, Japan and the Middle East. Phi Commerce had won the "Best in Class Payment Startup in Established Fintech Category" at the 2024 Assocham Annual Fintech Excellence Awards.