Debit Cards vs. UPI in Driving Financial Inclusion in India: A Comparative Study of Relevance, Adoption, and Hybrid Usage Patterns

Mukesh Kumar, Dr. Vishal Saxena

Abstract: The path towards financial inclusion has undergone a dramatic transformation due to the swift development of India's digital payment infrastructure. Debit cards, especially RuPay and ATM-cum-debit cards, were initially essential in expanding banking services through programs like the Jan Dhan Yojana. Their hegemony has been progressively diminished, though, by the emergence of the Unified Payments Interface (UPI). This study examines how UPI and debit cards contribute to financial inclusion, using secondary data from the RBI, NPCI, and World Bank (2012-2025). According to the data, debit card transactions increased gradually until 2019-20, reaching a peak of ?7.04 lakh crore, before leveling out at ?5-7 lakh crore a year. On the other hand, demonetization and the COVID-19 pandemic caused a sharp increase in UPI transactions, which went from ?0.69 lakh crore in 2016-17 to ?260 lakh crore in 2024-25. UPI's mobile-centric architecture, real-time interoperability, and merchant integration have transformed digital payments, even while debit cards are still primarily centered on ATMs. The survey also highlights issues like infrastructural deficiencies, fraud concerns, and hurdles to digital literacy. There is evidence of dual usage, with consumers favoring debit cards for cash requirements and UPI for digital payments. This underscores the necessity of balanced governmental support to maintain inclusivity in low-connectivity and rural areas.

Keywords: Financial Inclusion, Debit Cards, Unified Payments Interface (UPI), Digital Payments, India