Cigarette stores have become one of the most unexpected winners of India’s digital payments growth, which is changing daily spending.
Tobacco Kiosks Ride the UPI Wave
Tobacco kiosks are controlling an increasing portion of digital money flows as the usage of the Unified Payments Interface (UPI) spreads across regular, low-value transactions.
Both size and structure show the change. Between November 2023 and November 2025, transaction volumes at cigarette and tobacco stores increased by more than eight times, which was the highest growth among the main consumption categories monitored.
Eightfold Growth in Two Years
In only two years, UPI transactions at cigarette shops have increased eightfold.
UPI’s Transition to Everyday Routines
Overall, from 6.6 billion transactions in November 2023 to 12.8 billion by November 2025, UPI volumes almost quadrupled over that time. Grocery shops, petrol stations, pharmacies, dairies, and fast-food restaurants are examples of habit-driven, everyday-use sectors that contributed significantly to this rise.
Their proportion of UPI volumes increased from 19.2 percent to 25.1 percent as grocery transactions alone increased from 1.27 billion to 3.22 billion. Additionally, fast-food restaurants increased their share of transactions overall, demonstrating the growing adoption of digital payments for everyday purchases.
Cigarette Stores Lead in Digital Adoption
Shops selling cigarettes and cigars stand out in this larger change. By November 2025, their relative presence has more than quadrupled from only 0.66 percent of all UPI transactions in November 2023 to 2.76 percent.
The category made up far less than 1% of UPI transactions throughout most of 2023 and the first part of 2024. However, consumption increased significantly starting in September 2024, and the proportion thereafter stabilized in the 2–2.7 percent range.
Digitalization of Micropayments
Average ticket sizes gradually decreased as transaction frequency increased. In comparison to the general UPI average of Rs 595–Rs 650 throughout the same time, the average UPI transaction value at cigarette stores decreased from about Rs 81 in November 2023 to approximately Rs 60 by November 2025.
Once virtually exclusively cash-based, micro-purchases are increasingly using UPI as their primary payment method.
Trends Across Small-Ticket Discretionary Markets
The trend is consistent with other small-ticket discretionary market trends. In recent months, UPI shares have increased in beer and wine stores, candy stores, barbershops, and apparel stores.
On the other hand, as UPI grows into a much wider universe of daily spending, industries like telecom and cable services—early adopters of digital payments—have seen their proportional shares fall.
