Rupay credit card monthly spending crosses Rs 10,000 crore; doubles market share

Rupay

Rupay credit card spending crossed Rs 10,000 crore in a month for the first time in December, aided by robust growth in credit card transactions through the Unified Payments Interface (UPI), people familiar with the matter said.

Rupay credit card spending through UPI crossed Rs 5,000 crore last month, which is almost 50 percent of overall Rupay credit card spending.

While the Reserve Bank of India allowed Rupay credit cards to be linked to UPI in mid-2022, most credit card-issuing banks activated it only last year and the pace of spending picked up from May.

Even at Rs 10,000 crore, Rupay’s market share in credit card spending is about 6 percent of overall credit card spending in India. This is almost double its share a year ago, when spending through UPI was minuscule.

Rupay credit card spending has grown three times over the last year, the sources said. Overall, credit card spending in the country was about Rs 1.65 lakh crore in December, according to the monthly card data published by RBI.

Cards in circulation

The Rupay card platform and UPI are run by the National Payments Corporation of India (NPCI), a not-for-profit organisation owned by banks and founded under the aegis of the RBI in 2008. It facilitates and acts as the payment settlement agency for digital transactions in the country.

The UPI platform, which enables instant fund transfers between bank accounts, does around 12 billion transactions valued at Rs 17 lakh crore in a month.

In another milestone for NPCI, the number of Rupay credit cards in circulation crossed 10 million in December, which is a little more than 10 percent of the overall credit cards in circulation. The number of credit cards in the country is likely to cross 100 million this month. At the end of December, the number of credit cards in circulation stood at 98 million, according to RBI data.

The popularity of UPI has given Rupay a big boost as customers started adopting it to benefit from credit card offers and reward points, along with interest-free credit for 45-50 days.

Customer interest increased even among large private sector banks such as HDFC Bank, Axis Bank, ICICI Bank, Kotak Bank and IndusInd Bank, the largest issuers of credit cards in the country. Public sector firm SBI Cards has also accelerated the issuance of Rupay credit cards. This has helped lift Rupay’s market share in new credit card issuances to almost 25 percent in mid-2023 from 10 percent in 2022.

Not an easy journey

Last October, Moneycontrol reported that 15-20 percent of merchants, both small and big, requested their banks to disable payments using Rupay credit card on UPI because of the merchant discount rate (commissions paid by merchants to banks) on credit cards. There are an estimated 70 million merchants using the UPI platform, while the number of point-of-sale (POS) terminals is about 8.5 million.

“Rupay credit card on UPI acceptance has grown among big merchants, who previously did not, enabling Rupay over the last few months,” said Mohit Bedi, co-founder of Kiwi, an app that issues customers a virtual Rupay credit card for UPI transactions.

The Rupay credit card platform also had other challenges such as international acceptance, which is important for affluent customers for overseas travel and spending. Some customers also prefer Visa or Mastercard due to the “premium brand” image associated with those cards.

Many private banks prefer Visa and Mastercard owing to the marketing budgets and commissions these platforms pay to the banks.

However, the popularity of UPI and the possibility of being able to link credit cards to UPI has made the Rupay platform attractive. Of the about 100 million credit card customers, only 40 million are unique, making Rupay especially attractive to customers who own more than one credit card.

Rupay credit cards on UPI is an important project for the regulator, policymakers, and NPCI, to take market share from international networks such as Visa, Mastercard, and American Express, which dominate card payments in the country. While Rupay dominates the debit card market, capturing the credit card market, which has a higher MDR, is an important goal for NPCI.