As global regulators increase their scrutiny on Visa and Mastercard over merchant fees, India has chosen a different path: creating rival payment networks that are increasingly sidelining international card networks.
The strategy builds on India’s Unified Payments Interface, known as UPI, a nine-year-old system that now processes more than 13 billion real-time transactions monthly, or about 71% of all transactions in the world’s most populous nation.
This payment system, which lets consumers and merchants bypass traditional card networks by connecting bank accounts directly through QR codes and mobile phones, now represents 36% of consumer spending in India, up from negligible levels five years ago, according to an analysis by Bernstein.
India is now leveraging UPI’s success to reshape its credit card market through RuPay, its homegrown card network. RuPay enjoys a crucial advantage: it’s the only payment system allowed to process credit card transactions through UPI. This exclusivity, granted only in 2022, is proving transformative.
In the first seven months of fiscal year 2025, RuPay processed 638 billion rupees ($7.43 billion) in UPI credit card transactions, nearly double the previous fiscal year’s total. These transactions now represent 28% of all credit card volume in India, up from 10% last year, according to Bernstein.
Indian authorities are aggressively putting pieces together to further popularize the adoption of RuPay credit cards — something that many banks initially resisted as they expressed concerns about losing interconnect charges.
The strategy involves careful calibration of fees. RuPay credit cards on UPI only charge merchant fees on transactions above 2,000 rupees ($23.3). This structure has particular appeal for small businesses that have historically resisted accepting credit cards due to fees. The average UPI credit transaction currently runs below 1,000 rupees.
Furthermore, India’s central bank last year ordered lenders to let consumers choose their card network when taking or renewing credit cards, prohibiting exclusive agreements with global networks. In August, the National Payments Corporation of India, which oversees both UPI and RuPay, directed banks to ensure RuPay cardholders receive the same rewards as other networks.
The push is working: RuPay accounted for half of all new credit cards issued in India in the month of June 2024, according to a recent disclosure by a lawmaker in the parliament.
“Assuming UPI linkage remains exclusive for RuPay cards, RuPay is likely to emerge as the dominant network for credit cards,” a Bernstein report led by Pranav Gundlapalle wrote Friday.
“Once the QR code based payments become dominant for credit based payments too, credit accounts of banks could be directly linked to the UPI network bypassing the cards,” the firm wrote.
As digital payments increasingly become strategic assets, India’s step is offering a template for other nations seeking to reduce dependence on Western payment networks.
