As international regulators improve their scrutiny on Visa and Mastercard over service provider charges, India has chosen a special path: creating rival cost networks which can be more and more sidelining worldwide card networks.
The technique builds on India’s Unified Funds Interface, generally known as UPI, a nine-year-old system that now processes greater than 13 billion real-time transactions month-to-month, or about 71% of all transactions on the planet’s most populous nation.
This cost system, which lets customers and retailers bypass conventional card networks by connecting financial institution accounts straight by QR codes and cellphones, now represents 36% of client spending in India, up from negligible ranges 5 years in the past, based on an evaluation by Bernstein.
India is now leveraging UPI’s success to reshape its bank card market by RuPay, its homegrown card community. RuPay enjoys a vital benefit: it’s the one cost system allowed to course of bank card transactions by UPI. This exclusivity, granted solely in 2022, is proving transformative.
Within the first seven months of fiscal 12 months 2025, RuPay processed 638 billion rupees ($7.43 billion) in UPI bank card transactions, practically double the earlier fiscal 12 months’s whole. These transactions now symbolize 28% of all bank card quantity in India, up from 10% final 12 months, based on Bernstein.
Indian authorities are aggressively placing items collectively to additional popularize the adoption of RuPay bank cards — one thing that many banks initially resisted as they expressed issues about shedding interconnect fees.
The technique entails cautious calibration of charges. RuPay bank cards on UPI solely cost service provider charges on transactions above 2,000 rupees ($23.3). This construction has specific enchantment for small companies which have traditionally resisted accepting bank cards resulting from charges. The common UPI credit score transaction at the moment runs beneath 1,000 rupees.
Moreover, India’s central financial institution final 12 months ordered lenders to let customers select their card community when taking or renewing bank cards, prohibiting unique agreements with international networks. In August, the Nationwide Funds Company of India, which oversees each UPI and RuPay, directed banks to make sure RuPay cardholders obtain the identical rewards as different networks.
The push is working: RuPay accounted for half of all new bank cards issued in India within the month of June 2024, based on a current disclosure by a lawmaker within 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 agency wrote.
As digital funds more and more grow to be strategic belongings, India’s step is providing a template for different nations in search of to scale back dependence on Western cost networks.
