As international regulators improve their scrutiny on Visa and Mastercard over service provider charges, India has chosen a unique path: creating rival fee networks which are more and more sidelining worldwide card networks.
The technique builds on India’s Unified Funds Interface, referred to 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 this planet’s most populous nation.
This fee system, which lets shoppers and retailers bypass conventional card networks by connecting financial institution accounts straight by means of QR codes and cell phones, now represents 36% of shopper spending in India, up from negligible ranges 5 years in the past, in response to an evaluation by Bernstein.
India is now leveraging UPI’s success to reshape its bank card market by means of RuPay, its homegrown card community. RuPay enjoys a vital benefit: it’s the one fee system allowed to course of bank card transactions by means of 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 complete. These transactions now symbolize 28% of all bank card quantity in India, up from 10% final 12 months, in response to 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 dropping interconnect prices.
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 as a consequence of charges. The typical UPI credit score transaction at present runs under 1,000 rupees.
Moreover, India’s central financial institution final 12 months ordered lenders to let shoppers 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, in response to 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 develop into strategic belongings, India’s step is providing a template for different nations looking for to scale back dependence on Western fee networks.
