Festive Spark: Digital Merchant Payments Set for Oct-Nov Recovery
Equirus Securities predicts a recovery in digital merchant payments during October and November, driven by festive spending following a September dip.
After a slight dip in September, digital merchant payments are poised for a strong comeback in October and November. According to a recent report by Equirus Securities, the festive season is expected to drive a significant surge in consumer spending, reversing the minor downward trend seen in the previous month.
The September Slump: A Closer Look
The data reveals that digital merchant payments saw a month-on-month (MoM) decline of 0.8 per cent, totaling Rs 11.4 trillion in September 2026. However, the long-term trajectory remains positive, with a robust year-on-year (YoY) growth of 15.7 per cent.
The report highlights a divergence in payment modes during September:
- UPI Person-to-Merchant (P2M): Showed strong resilience with a 23.3 per cent YoY growth, despite a marginal MoM dip of 0.9 per cent.
- Credit Cards: Experienced a 5.9 per cent YoY decline, though they saw a slight MoM increase of 0.7 per cent, reaching Rs 2.04 trillion.
- Debit Cards and PPI: Both struggled, with spending falling by 7.3 per cent and 6.4 per cent MoM, respectively.
The Calendar Effect: Why Credit Cards Dipped
Equirus Securities clarifies that the decline in credit card spending is not a sign of weakening consumer demand but rather a result of a shifting festive calendar. In 2025, Navratri occurred in September, which boosted spending during that month to 13 per cent above the July-August average.
This year, the festivities have shifted. With Diwali falling on November 8, 2026 (compared to October 20, 2025), the "festive lift" is expected to be concentrated in the October-November window of 2026.
Market Share and Spending Habits
UPI continues to dominate the digital landscape, though its share of total digital spends eased slightly to 77.6 per cent in September. Credit cards held a 17.8 per cent share, which is slightly lower than the 12-month average of approximately 19 per cent.
Credit Card Insights:
The report provides a deep dive into how credit cards are being used:
- E-commerce Dominance: Online shopping accounted for a massive 61.9 per cent of all credit card spends in September 2026.
- Average Spend: The average monthly e-commerce spend per card was Rs 10,061, while the average Point of Sale (POS) spend stood at Rs 6,204.
- Card Growth: The industry saw an increase of 12.62 lakh new cards in force during September, bringing the total number of cards to 12.53 crore.
The Struggle of Debit Cards
While UPI and credit cards maintain their stronghold, debit cards continue to lag. Spending via debit cards decreased by 7.6 per cent YoY and 7.3 per cent MoM, indicating a clear consumer preference for other digital payment alternatives.