UPI-based credit card management fintech Kiwi is witnessing a surge in transactions through the Rupay credit card on UPI option with users spending more than Rs 22,000 every month, the firm said in a report on May 23.
“Credit card on UPI has become the primary mode of payment, with users spending more than Rs. 22,000 every month. The average number of transactions using a CC on UPI is 21 per month, which is four times that of a traditional physical credit card,” the firm said.
The report highlighted that more than Rs 100 crore worth of credit card on UPI transactions are happening on Kiwi’s platform on a monthly basis.
“Rupay Credit Cards' market share has grown from 3% in FY23 to 10% in FY24. This success can be largely attributed to UPI's success. Being a frontrunner in issuing Rupay credit cards, we at Kiwi are thrilled to see the swift adoption and usage of Rupay's 'Credit Cards on UPI,” said Kiwi co-founder Mohit Bedi.
Backed by NPCI, Kiwi offers credit cards on UPI in partnership with banks. Kiwi was co-founded by senior fintech experts and banking industry veterans, Siddharth Mehta (ex-CEO, Freecharge), Bedi (ex-Axis Bank and PayU) and Anup Agrawal (ex-business head, LazyPay), in November 2022. The company went live with its first banking partner, Axis Bank, in July 2023.
What is credit on UPI
Credit on UPI (Unified Payments Interface) refers to the integration of credit cards and other credit facilities with the UPI system in India.
Also Read: Credit on UPI: Here’s how it works, and its benefits
UPI is a real-time payment system developed by the National Payments Corporation of India (NPCI) that facilitates inter-bank transactions. It allows users to link their bank accounts to a mobile application and make instant money transfers.
In April 2023, Reserve Bank of India (RBI) governor Shaktikanta Das had announced the introduction of a collateral-free, pre-approved credit line, or borrowing limit, that a user could access from his bank via the UPI platform.
Following that announcement, in September 2023, the National Payments Corporation of India (NPCI) gave a demonstration at the Global
Fintech Festival (GFF) of how this will work.
Axis Bank, HDFC Bank, ICICI Bank, Kotak Mahindra Bank, Punjab National Bank (PNB), and the State Bank of India (SBI), among others were reportedly testing this feature among a limited set of users on payment apps such as Bharat Interface for Money (BHIM).
Rise of Rupay credit card on UPI
In June 2022, RBI allowed RuPay credit cards to be linked to UPI and no other credit card has this facility. According to RBI data, RuPay credit cards linked to UPI have seen significant growth in the last couple of years—credit cards issued rose from 10 percent in 2022 to 25-30 percent within a year
Also Read: Linking RuPay credit cards to UPI: Why it helps, and where it doesn’t
Kiwi’s report also said that the adoption of 'credit cards on UPI' was highest among young adults below 40 (78% of the users) and around 75% of all these transactions occur at small merchants, showcasing widespread acceptance and utilisation of credit card payments.
“The concept of virtual credit cards has picked up exponentially. Nearly 20 out of every 100 credit cards being issued in the country are virtual credit cards,” Bedi added.
While the adoption is accelerating, the report noted that the average transaction size on credit cards on UPI is lower compared to traditional credit cards.
“The average transaction size for 'Credit Cards on UPI' users is Rs. 1,125, significantly lower than traditional credit card transactions, which average around Rs. 4,000,” the report said.
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