India Digital Merchant Payments May Rebound in October and November After September Dip

September’s dip in digital merchant payments looks more like a timing effect than a clear sign of weakening consumer demand. Payments totaled ₹11.4 trillion, down 0.8 per cent month-on-month but up 15.7 per cent year-on-year, according to Equirus Securities. The report expects spending to recover in October and November as this year’s festive activity falls later in the calendar.

The timing matters because the comparison with September 2025 includes a festive boost that this September did not have. Navratri fell in September last year and in October this year. Equirus said nine festive-spending days in September 2025 pushed credit card expenditure around 13 per cent above the average in July and August 2025. Diwali is on 8 Nov'26, compared with 20 Oct'25, the report said, and it expects the festive lift to appear across October and November this year.

Payment methods moved in different directions

The headline decline masks a split among payment types. UPI person-to-merchant (P2M) transactions grew 23.3 per cent year-on-year in September, even as their value fell 0.9 per cent from August. Credit card spending, by contrast, increased 0.7 per cent month-on-month but declined 5.9 per cent year-on-year. Equirus attributed the annual credit card decline mainly to the shift in festive timing, rather than a slowdown in consumer demand.

Debit and prepaid payments had a weaker month on both comparisons. Debit card spending fell 7.3 per cent month-on-month and 7.6 per cent year-on-year. Spending through prepaid payment instruments (PPIs) was down 6.4 per cent from August. The report said debit card spending continues to lag credit cards and UPI. These differences show why the aggregate figure alone gives an incomplete view: payment channels can respond differently to seasonal spending and consumer preferences.

UPI-P2M remained the largest component of digital merchant spending, with a 77.6 per cent share in September, down 8 basis points month-on-month. Credit cards accounted for 17.8 per cent, below their past 12-month average of approximately 19 per cent. The share figures put the September movement in perspective: UPI remains dominant, while credit cards’ portion of spending was smaller than its recent average despite a modest monthly increase in card expenditure.

Card spending and usage mix

Credit card spending reached ₹2.04 trillion in September 2026, a marginal increase from August. Its year-on-year decline alongside that monthly gain underscores the effect of the comparison period: September 2025 had an unusually strong festive contribution, according to the report. The October and November data will show whether spending shifts into the later festive window as Equirus expects.

Online purchases accounted for 61.9 per cent of total credit card spending in September. Average monthly e-commerce spending per card was ₹10,061, while average point-of-sale (POS) spending was ₹6,204. That split indicates that online transactions made up the larger share of card expenditure during the month. The figures describe spending per card and the channel mix; they do not, by themselves, establish whether individual customers spent more or whether activity was spread across more cardholders.

The industry added 12.62 lakh cards in force (CIF) during September, bringing the total to 12.53 crore. A larger card base can expand the potential reach of card payments, but card counts do not measure how frequently cards are used or how much customers spend. In this month’s data, card numbers rose while credit card expenditure remained below its year-earlier level.

What the next two months will clarify

The key test is whether the later festive calendar produces the expected recovery in merchant payments, and how that activity is divided among UPI, credit cards, debit cards and PPIs. October and November comparisons will need to account for the different timing of Navratri and Diwali, since a year-on-year change can reflect when spending occurred as well as how much consumers spent.

For now, the evidence points to continued strength in UPI-P2M over the year, a monthly credit card increase that did not erase its annual decline, and ongoing weakness in debit card spending. Equirus’s expectation rests on festive spending shifting into the coming months. The resulting data will help distinguish a calendar-driven September dip from a broader change in merchant payment activity.