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As digital payments evolve into a smart economy, India is providing a template for other countries looking to reduce their reliance on Western payment networks.
Regulators around the world are looking to Visa and Mastercard for merchant payments, but India has chosen a different approach: Creating a growing international credit card payment network.
India’s system builds on the Unified Payments Interface, known as UPI, a nine-year-old system that allows consumers and merchants to bypass traditional cards by connecting bank accounts directly through QR codes and phone numbers.
UPI network now generates more than 13 billion real-time transactions per month – that’s about 71% of all transactions in the most populous country – and they account for 36% of all consumer spending in the country, according to Bernstein’s research.
UPI’s biggest success has yet to be realized. The local government has been leveraging the success of the scheme to revamp its credit card market with RuPay, a domestic credit card processing system. RuPay has an important advantage: It is the only payment method allowed to process credit cards through UPI.
This isolation, it was only given in 2022shows a turnaround: RuPay processed ₹638 billion ($7.43 billion) on UPI credit cards in the first seven months of the 2025 financial year, nearly double the previous year.
These transactions now make up 28% of all credit card transactions in India, up from 10% last year, according to Bernstein. (RuPay’s credit card figures do not include in-store swipes and transactions, as the data is not available, so its market cap is very high.)
And last year, the authorities started working aggressively to increase the adoption of RuPay credit cards, a push that many banks initially resisted, citing concerns about losing exchange rates.
This process also involves keeping track of payments. RuPay debit cards on UPI only pay for transactions over ₹2,000 ($23.3). This design is attracting more and more small businesses who have previously rejected credit cards to avoid paying fees, as the average UPI credit limit falls below ₹ 1,000.
In addition, India’s central bank last year ordered lenders to allow consumers to choose their own card when taking out or renewing credit cards, banning exclusive deals with international networks. In August, the National Payments Corporation of India (NPCI), which oversees UPI and RuPay, ordered banks to ensure that RuPay cardholders receive the same rewards as other networks.
The push seems to be working: RuPay accounted for half of all credit cards issued in India in June 2024, according to a recent statement by a lawmaker in parliament.
“Assuming that UPI connectivity remains limited to RuPay cards, RuPay is seen as a dominant credit card network,” Bernstein’s report on Friday read.
“As QR code-based payments become more and more important for credit transactions, bank accounts can be directly linked to the UPI network through credit cards,” the research firm wrote.
Faced with such pressure from the local government and a changing consumer landscape, payment giants Visa and Mastercard have been forced to change the way they operate in India. He has cooperation with fintechs in recent months to expand credit card support at UPI-operated points of sale, which are used by more than 10 million merchants in India. It is very interesting: The same cards did not find the possibility to work with small traders a few years ago.
But that effort may be too little, too late. The stratospheric growth of UPI is burning the credit card industry to a large extent – the share of the credit card market in digital payments in India has dropped to 21% in 2024 from 43% in 2018. For Visa and MasterCard, the threat is real, and the battle is near. uphill if they don’t find a way to turn this opportunity into an opportunity.
