RuPay’s credit card market share rises to 12 percent in 2024, transaction volume growing 20% monthly

Rupay Credit Card on UPI

Customers using RuPay credit cards linked to UPI do 40 transactions per month average, eight times higher than traditional credit card users, according to an analysis done by RuPay credit card fintech Kiwi.

The higher frequency helped RuPay corner a 12 percent market share for card transaction volume in 2024, compared to the three percent the payment network had in 2023, the Kiwi report said. However, according to banking sources, Rupay's market share is close to 14 percent.

Both RuPay and Unified Payments Interface (UPI) are run by the National Payments Corporation of India (NPCI). UPI is the country’s most popular digital payment method cornering around 83 percent of all such transactions, as per RBI data.

Kiwi has aggregated and extrapolated the numbers mentioned in the report, and only NPCI has the full Rupay data. However, NPCI does not disclose any Rupay-related data.

RuPay is a domestic card network that competes with global giants Visa and Mastercard. Only RuPay cards are allowed to be linked to UPI as per the regulations.

The cumulative monthly transaction value of RuPay is around Rs 14,000 crore through UPI, while the overall spending on credit card network in a month is around Rs 1.8 lakh crore, which translates into a 7.5 percent market share in value.

Rupay's overall spending including those at Point of Sale terminals through swiping as well as tap and pay is estimated to be around Rs 26,000 crore, again close to 14 percent market share.

More than half of all RuPay credit card transactions happen through UPI. A year ago, RuPay was doing around Rs 10,000 worth of transactions in a month, of which 50 percent came through UPI.

While RuPay is the most successful debit card platform with more than 80 percent of the market share in cards issued, it trails Visa and Mastercard in credit cards, where the spending is much higher. However, with the linking of RuPay credit cards with UPI, the platform has now cornered a 25 percent market share in new credit cards issued in the country. There are around 10.8 crore active credit cards in the country as per the Reserve Bank of India data.

However, RuPay network's popularity has been surging over the last year as customers get the best of credit card rewards with the convenience and reach of UPI. While there are only 9o lakh card-accepting merchants, there are an estimated 32 crore UPI merchants.

RuPay credit card spending is growing at 5 percent monthly, reaching an average of Rs 40,000 per user, according to data available with Kiwi. The company, is one of the early adopters of enabling virtual RuPay credit cards (issued by Axis Bank and Yes Bank) that can be linked with their UPI accounts. Kiwi has raised a little less than $20 million until now and does around Rs 300 crore worth of transactions in a month.

However, the average transaction value is Rs 1,100, much lower compared to Visa and Mastercard, where the average transaction value is around Rs 4,000. This is mostly because the cards are still mostly used for daily small-value payments, where the customers earlier used to pay with UPI.

“UPI-enabled credit cards are transforming how millions of Indians engage with credit, By combining the convenience and widespread acceptance of UPI with the power of credit, we are seeing a new wave of financial inclusion. This empowers individuals with more responsible, accessible, and transparent financial tools, driving a shift towards smarter spending habits and responsible credit usage,” says Mohit Bedi, cofounder of Kiwi.

This surge is benefiting local retailers and small merchants, with 75 percent of transactions being conducted at grocery shops and other small businesses in the country.

Due to a high merchant discount rate – or the commission that merchants pay to card issuing banks and payment providers – most small merchants are reluctant to accept credit cards. On the other hand, small offline merchants using RuPay credit cards on UPI are charged fees only for transactions exceeding Rs 2,000, making them particularly attractive to small businesses that previously avoided credit cards. RuPay had also faced some resistance from merchants in the past.

Most credit card users have more than one credit card and customers are increasingly opting for virtual RuPay credit cards as their second or third, with 50 percent of these cards being digital ones. They are also more popular with younger customers with around 45 percent of users in the under 30 age group, and another 30 percent of users between ages 31 and 40.

The rise of RuPay has been helped by the regulatory diktats. Last year, RBI mandated all card issuers (mostly banks) to offer consumers the option to choose their card network when applying for a new credit card or when renewing their credit cards. This ended the decades-old way of banks entering into exclusive agreements with Visa and Mastercard. In August, NPCI also directed banks to ensure RuPay credit cardholders receive rewards on par with other networks.

RuPay’s growing foothold in the domestic credit card market is particularly significant as geopolitical tensions highlight the importance of domestic payment systems. The recent exclusion of Russian payment systems from global networks like Visa and Mastercard has underscored the need for nations to develop independent solutions.

NPCI is working with several countries to develop a similar domestic card network. It is also entering into bilateral partnerships with other countries that will enable international RuPay card payments without the help of other card networks.