Debit-Card Transactions Plummet by Nearly 50% over Past Two Years: Is the Traditional Card Still Necessary?

Debit Cards Losing Relevance as UPI Becomes Preferred Payment Method

For years, opening a bank account has meant getting a debit card, which serves as an access point for cash withdrawals, in-store shopping, and online payments. However, with the rise of Unified Payments Interface (UPI) simplifying everyday payments, bank customers might be paying annual fees for a card they seldom use.

The Reserve Bank of India's (RBI) data shows a significant decline in debit card transactions. In the fiscal year 2023-24, debit card transactions stood at 22,860 lakh, which dropped to 16,120 lakh in 2024-25 and further to 12,802 lakh in 2025-26, a fall of nearly 44 percent in just two years.

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On the other hand, UPI transactions surged from 13,11,295 lakh to 24,16,169 lakh during the same period, an increase of about 84 percent.

For millions of Indians, UPI has become the default payment method for buying groceries to paying utility bills, reducing the need to swipe or tap a debit card. However, debit cards still have a role in certain situations.

Traditionally, debit cards were used for ATM withdrawals, point-of-sale purchases, and online transactions. However, their use has changed with the rise of UPI. Debit cards are now primarily used for ATM cash access rather than point-of-sale transactions, a function that remains essential, particularly in rural areas and on platforms yet to integrate UPI-based payment infrastructure.

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Many banks now offer cardless cash withdrawals through mobile banking apps and UPI-enabled platforms, reducing the need to carry a physical debit card. However, UPI-enabled cash withdrawal infrastructure is not yet universally available across all ATMs, and as more ATMs become enabled for UPI-based cash withdrawals, a meaningful portion of these transactions is also expected to migrate to UPI.

While debit cards continue to serve as a backup during internet outages, UPI disruptions, and for certain banking verification processes, there is a question of cost. Banks often charge annual maintenance fees for debit cards, with fees varying by card type and account. For customers who rarely use their cards, these fees can seem increasingly difficult to justify.

As UPI expands further across payments and cash-access use cases, the role of debit cards in domestic transactions could gradually become more limited and utility-driven, particularly for digitally native customers who rely on mobile-first payment experiences. This evolution may require banks to rethink how they issue, re-issue, and price debit cards going forward.

Experts suggest carrying only one or two debit cards for emergencies, which can reduce annual fees, free up wallet space, lower the risk of theft or misuse, and make it easier to track spending and spot unauthorized transactions.