If you walked through the bustling streets of Delhi’s Sadar Bazar or T. Nagar in Chennai five years ago, the festive soundtrack was distinct. It was the rustle of currency notes, the jingle of coins exchanging hands, and the constant shout of vendors asking for exact change.
Today, that chaotic symphony has been replaced by a singular, melodic sound. It is the audio notification of a payment box announcing, “Payment Received.”
This is not just a change in how money moves. It is a fundamental alteration in the anatomy of Indian aspiration.
At Rukam Capital, we have been closely tracking this shift. Our report, Aspirations of New India Report 2025, paints a picture of a consumer base that has leapfrogged traditional financial evolution. We are no longer waiting for credit cards to penetrate the hinterland. We have bypassed the plastic era to embrace a code-based economy—an evolution that venture capital has quietly accelerated by backing fintech rails, digital commerce enablers, and MSME-focused platforms.
The numbers are staggering. In October 2025 alone, UPI hit a lifetime high of ₹27.28 lakh crore across 20.7 billion transactions, fueled by the festive splurges.
Private consumption is steering the ship of a GDP projected to grow at 7.5 percent. But the vessel itself has changed. It is no longer powered by cash availability. It is powered by the seamless Unified Payments Interface (UPI).
Here is how the simple act of scanning a square code is rewriting the rules of Indian commerce.
The Tale of Two Indias (and One Payment Method)
For decades, marketers and economists have sliced India into neat little tiers. Tier 1 was the land of credit cards and department stores. Tier 3 was the land of cash and general stores. Our data suggests that these lines are blurring in unexpected ways.
In Rukam Capital’s 2025 consumer report, we surveyed 5,000 consumers across 18 states. We found that while the festive spirit is universal, the mechanism of spending varies significantly by geography.
Contrary to the lazy assumption that small towns rely on cash, our data shows that Tier 3 consumers are actually outpacing their metropolitan counterparts in digital adoption for daily commerce. Tier 3 respondents recorded the highest UPI usage at 42 percent for festive shopping.
This is a massive deviation from the norm. Why is a consumer in a semi-urban setting, who has traditionally been seen as “credit averse,” turning to digital rails? The answer lies in accessibility. This demographic showed minimal reliance on credit cards, with usage at just 16 percent.
For them, UPI is not a backup option. It is the primary bridge to the digital economy. It allows a consumer in a semi-urban setting to access the same marketplace as a metro resident without the barrier of credit eligibility or the friction of cash logistics.
In contrast, the metropolitan consumer displays what we call “financial maturity.” In Tier 1 cities, shoppers balance their UPI usage (36 percent) with a strong adoption of credit cards (24 percent). This behaviour is not driven by access but by the pursuit of value. These consumers are hunting for rewards, cashback, and festive offers that credit cards offer.
However, when the festive rush hits, speed trumps rewards. Our survey found that 67 percent of festive shoppers pick UPI specifically for its speed amid the crowd, outpacing cash (12 percent) and cards (11 percent).
This democratisation of payments is precisely why venture capital continues pouring into digital infrastructure, fraud detection, consumer finance APIs, and merchant tools that support a frictionless economy.
The Slow Death of Debit
One of the most significant structural shifts we are witnessing is the slow, agonising death of the debit card as a shopping tool. The RBI Payments System Report confirms that debit card transactions have been in decline since 2019, both in volume and value.
In volume terms, debit card transactions crashed from 495 crore in 2019 to 173 crore in 2024. In the first half (H1) of 2025, debit cards recorded just 69 crore transactions. Meanwhile, credit card volumes surged from 208 crore in 2019 to 447 crore in 2024.
Why is this happening? Because the Indian consumer has reorganised their wallet into a strict hierarchy:
UPI is for frequency.
Credit Cards are for value and financing.
Debit Cards have been relegated to the role of an ATM key.
The “Kirana Effect” and the Power of Small
While festive sales grab headlines with big numbers, cars, jewellery, and electronics, the true revolution lies in the mundane. It is in the packet of milk, the auto-rickshaw ride, and the evening chai.
The Worldline India Digital Payments Report 1H 2025 describes a phenomenon that perfectly complements our findings. They call it the “Kirana Effect.” It is the idea that millions of tiny taps beat one big swipe.
There was a time when digital payments were reserved for high-ticket items because the Merchant Discount Rate (MDR) ate into the margins of small vendors. That era is over. The average ticket size of a UPI transaction dropped to ₹1,348 in the first half of 2025, down from ₹1,478 a year prior. For Person-to-Merchant (P2M) transactions, such as buying groceries, the average ticket size is just ₹589.
A falling ticket size is actually a sign of massive success. It indicates that the technology has normalised for micro-transactions. This shift is supported by infrastructure growth that is hard to visualise until you see the numbers. India now boasts 678 million UPI QR codes. That is a staggering 111 percent increase from January 2024. Compare this to the 11.2 million Point of Sale (PoS) terminals, and you see why the QR code is the true face of Indian retail.
Healthy Snacks and Homegrown Heroes
So, what are Indians buying with these quick scans? Rukam’s 2025 consumer report dives deep into the basket. We found that healthy snacks are topping festive lists. Over 50 percent of consumers plan to buy healthy snacks, and 40 percent are eyeing sugar-free sweets.
There is a distinct tier-based behaviour here, too. Tier 1 leads the charge with 57 per cent opting for healthy snacks. Tier 3 remains the custodian of tradition, with 65 per cent sticking to conventional sweets.
But the most heartening trend is the rise of the “purpose-driven” buyer. The ease of digital payments has empowered consumers to support brands that align with their values. We discovered that 58 percent of Indian consumers now actively prefer homegrown, local brands. Even more striking is that 14 percent are willing to pay a 20 to 30 percent premium for authentic and regional brands.
This is the very trend shaping the pipeline of venture capital investments today—homegrown FMCG challengers, regional food brands, and clean-label founders who build trust digitally and distribute through UPI-accelerated commerce.
Data as Collateral: The Financial Inclusion Engine
The story of UPI is often told as a story of convenience. But the BCG-NPCI Report highlights a deeper narrative. It is a story of inclusion.
For decades, millions of small merchants (MSMEs) operated in the shadows. They dealt in cash. They had no credit history. UPI changed that. Every digital transaction creates a data point. A stream of data points creates a cash flow history. And a verified cash flow history is collateral.
According to BCG, 80 percent of merchants surveyed reported easier and faster access to financing after adopting UPI. The impact is visible at a district level. Districts with high UPI volume growth (over 100 percent) recorded a 4.2x higher CAGR in business loan growth than districts with modest UPI growth.
At Rukam Capital, we see this democratisation of credit fueling the very homegrown brands we invest in. It allows a small artisan in Jaipur or a snack manufacturer in Indore to scale their operations to meet the demand of the festive season.
The Convergence of 2025
The narrative of Indian commerce in 2025 is one of convergence.
We see the convergence of Tier 1 and Tier 3 behaviours through the great equaliser of technology. According to the RBI Payments System Report, digital payments accounted for 99.8 percent of total payment volumes in the first half of 2025.
We see the convergence of festive tradition with digital convenience. On Diwali eve alone, the country saw 740 million transactions. The lights and sweets are traditional, but the payment is futuristic.
For investors, brands, and policymakers, the message from our data is undeniable. The Indian consumer has moved on from the adage that “Cash is King.” In New India, Trust is Currency, and UPI is the rail it runs on.
