Updated May 18, 2025 14:45 IST
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Money Management: Are GenZs ditching credit cards for prepaid wallets?
Money Management: India’s younger generation is rewriting the rules of financial transactions, moving away from traditional credit cards and embracing prepaid digital wallets. With Gen-Z entering its peak spending years, their approach to payments is shaped by a desire for convenience, security, and financial independence.
Are Credit Cards No Longer An Appeal to the Young?
Unlike previous generations, who relied on credit cards for purchases, today’s young consumers are increasingly wary of debt traps, high interest rates, and hidden charges. Credit cards, once considered a status symbol, are now seen as a liability encouraging overspending and creating unnecessary financial stress.
Smartphones, Internet, and Seamless Spending
Piyali Chatterjee Konar, Executive Vice President, Head- CX/UX/B2B at Hansa Research Group Private, said that the rapid spread of smartphones and affordable mobile internet has fueled the rise of digital payments, especially wallets, among India’s youth.
This trend further accelerated during the COVID era when contactless transactions became a necessity.
The Rise of Prepaid Digital Wallets
Young consumers naturally gravitate toward convenience and ease of use in every service, and digital wallets deliver just that.
“Unlike credit cards, which require complex onboarding and eligibility checks, digital wallets are simple to access and use, making them the preferred choice for a generation that values speed, simplicity, and instant access,” Konar said.
DigiPay CuES: What the Data Tells Us
Hansa Research’s Syndicated report’ DigiPay CuES’ highlighted how this preference is translating into higher usage of digital payments for the youth who reflect 1.2X times higher daily usage than the older cohort.
Konar added that digital payments in India have grown at an explosive rate, with a 42% year-on-year rise in FY 2023–24.
UPI’s Rise and the Wallet Wave
“UPI, the backbone of this revolution, recorded a 57% increase in transaction volume, with over 131 billion transactions last year alone. By 2028–29, this number is expected to soar to 439 billion, covering 91% of all retail digital payments in India. Digital wallets have played a crucial role in this transformation, offering instant, seamless, and debt-free transactions. Unlike credit cards, which rely on borrowing, prepaid wallets allow users to spend only what they have, eliminating the risk of accumulating interest or late payment fees,” Konar underlined.
The security features of digital wallets, including biometric authentication and tokenization, also make them a safer alternative to credit cards, which are prone to fraud and misuse.
Debt-Free and In Control: The Wallet Advantage
The idea of relying on a credit card for financial flexibility is now outdated. Consumers prefer prepaid digital wallets that provide greater control over their spending while avoiding the pitfalls of high-interest debt.
“As India continues its journey toward a fully digital economy, credit cards are fast losing relevance, and digital wallets are emerging as the smarter, more responsible choice for young Indians,” Konar pointed out.
(Disclaimer: The above article is meant for informational purposes only, and should not be considered as any investment advice. ET NOW DIGITAL suggests its readers/audience to consult their financial advisors before making any money related decisions.)
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