NPCI prepares to disrupt credit cards as RuPay-linked UPI payments gain traction

With UPI accounting for over 90% of digital retail transactions and RuPay’s share of UPI-linked credit card usage rising from 10% to 38%, the Indian ecosystem is rapidly moving away from traditional card networks. | Photo credit: Dado Ruvic/Reuters

According to a research report by Bernstein, “NPCI has already disrupted debit cards with the explosive rise of UPI. Now it is on track to shake up credit cards as well.”

The report notes that India’s payments ecosystem, powered by UPI, RuPay and a broad base of state-backed digital infrastructure, has created the conditions for an unprecedented shift away from traditional card networks.

Today, UPI is responsible for more than 90 percent of retail digital payment transactions when measured by volume, with QR-based acceptance eliminating the need for expensive payment terminals. The result has been a steady decline in debit card usage, which has been almost completely replaced by UPI’s low-cost, instant payment model.

The report highlights that the next phase of disruption will come from linking RuPay credit cards to UPI, allowing customers to use lines of credit on the same QR-enabled merchant network that made UPI ubiquitous.

This move is expected to dramatically increase credit penetration, with RuPay already gaining traction in the credit card segment, jumping from 10 percent to 38 percent of UPI-linked credit card transactions in a short time.

The report explicitly names PhonePe, Paytm and Google Pay as the fintech players that have promoted digital payments and are poised to further benefit from the credit-on-UPI wave. These platforms already dominate consumer UPI transactions and have a combined market share of over 90 percent.

Integrating lines of credit directly into UPI will enable fintech apps to increase engagement, unlock new lending-driven monetization opportunities, reduce dependence on traditional card network economies, and expand their overall financial services footprint. As lending on UPI continues to gain traction, the Indian fintech ecosystem is expected to witness accelerated innovation and competitive gains, especially for large payment apps with massive distribution.

NPCI’s model has shown that a domestic payments network, supported by regulators, government-led financial inclusion and fintech innovation, can match and possibly surpass global card networks, while operating at a fraction of the cost.

As UPI-linked credit lines evolve, the report suggests that physical credit cards could eventually suffer the same fate as debit cards, overshadowed by India’s fast-paced digital ecosystem.

Published on November 19, 2025