Digital payment, payment through digital or online modes, has become the forerunner in the market. There are numerous digital payments solutions that have increased in popularity in the last three years, such as UPI, Net Banking, Open Banking applications, USSD, AEPS, and so on. The need to make it easy for consumers to make payments has been the driving force behind the development of the payment system, as it has a direct impact on a customer's purchasing habits. And because of this, Google Pay, PayTM, PhonePe, MobiKwik, Amazon Pay have become the major players in the digital payment industry. These payment methods have made it easy for all to make quicker payments and not to carry liquid cash with them. As these wallets initially penetrated very small businesses and non-tier-1 cities with cash-backs, they have innovated and delivered a simple user interface that requires minimal user learning. Scanning a QRCode or simply typing in the merchant's phone number, for example, is easy. It's just a few clicks away to send money to a friend to pay off debts. Furthermore, in addition to simplifying payments, these wallets offer value-added services such as bill payments and ticket booking, making them the preferred payment method of the smart Indian user. According to a recent estimate, digital commerce spending is projected to reach $11.6 trillion by the end of this year, up nearly 11.5 percent from $10.5 trillion last year. According to Juniper Research, this number includes money transfers and payments related to digital and physical goods transactions, digital ticketing, banking, bills, and near field contact mobile retail.
Reasons for increased adoption of digital payment
Increased awareness: Customer perception of digital modes of payment has risen dramatically in recent years, especially since the November 2016 demonetization. Consumers in Generation Z and Millennials are familiar with digital payments and use them often. Merchants will lose a significant amount of revenue if they do not accept digital payments.
Government policies: The current government's focus on achieving a cashless economy in India has resulted in the implementation of a number of policies that benefit merchants who integrate money transfers.
Quick onboarding and ease of use: Digital payments make the transactions cashless, easy and quick. People need not have to fear the loss of money by carrying liquid cash.
Smartphone proliferation and internet expansion: the immensive use of smartphones and internet has speed up the adoption of digital payments.
Regulatory support: The publication of a vision document by the Reserve Bank of India in May 2019 titled "Payment and Settlement Systems in India: Vision 2019-2021" is a step in the right direction. The paper outlines 36 concrete Action Points for transforming India into a Cashless Economy, and such efforts by the banking regulator are urgently needed to broaden the country's digital payments network.
Improved technology: the advancement in technology has highly strengthened digital payment methods making them safer and more convenient. 
While digital payments are increasing, credit cards, once favored means of digital transaction, are now losing out to other payment mechanisms.
Reasons for decreasing use of credit cards
- Piling up of money makes it difficult to pay back at the end of the period
- Failure of Cibil scores will affect the credit card limit. Cibil score is the ratio of credit card balance to credit limits, and when the credit utilization rate goes above 50%, the Cibil score decreases.
- If the credit utilization is above 50%, the lenders will consider that person as a risky customer and will not give a loan or may charge a higher interest.
- When a person is unable to pay back within the free credit period, he will have to pay higher interest rates for the outstanding balances.
- Using a credit card will likely make the person fall into a debt trap since the amount piles up, and he has to pay it at the end eventually.