As digital payments evolve into strategic assets, India is leading the way with a model that could inspire other nations to reduce their reliance on Western payment networks like Visa and Mastercard. While global regulators are scrutinizing the fees charged by these networks, India has taken a different path, developing its own alternatives that are rapidly gaining ground.

At the heart of this strategy is the Unified Payments Interface (UPI), a nine-year-old system that enables consumers and merchants to connect their bank accounts through QR codes and phone numbers, bypassing traditional card networks. Today, UPI processes over 13 billion monthly transactions, accounting for 71% of all payments in the world’s most populous nation and 36% of total consumer spending, according to Bernstein.

This success has allowed the Indian government to transform its credit card market through RuPay, a domestic network that holds a unique strategic advantage: since 2022, it has been the only network authorized to process credit transactions via UPI. This has proven to be a game-changer, with RuPay handling ₹638 billion ($7.43 billion) in UPI credit card transactions in the first seven months of fiscal year 2025—double the amount from the previous year. Its share of credit card transactions has surged from 10% in 2023 to 28% in 2024, though its market share could be even higher, as in-store transaction data is not included.

To promote RuPay’s adoption, authorities have carefully calibrated fees: merchants are charged only for transactions exceeding ₹2,000 ($23.3). This structure has appealed to small businesses, which have historically avoided credit cards due to high fees. Additionally, in 2023, the central bank mandated that lenders allow consumers to choose their card network when applying for or renewing credit cards, eliminating exclusive agreements with global networks. Meanwhile, the National Payments Corporation of India (NPCI), which oversees UPI and RuPay, required that RuPay cards offer equivalent rewards to those of other networks.

The impact of these measures is already evident: by June 2024, half of all new credit cards issued in India were RuPay cards. According to a Bernstein report, RuPay could establish itself as the dominant network in the country if it maintains its exclusivity with UPI. The report also predicts that QR code-based payments could render physical cards obsolete, directly linking bank credit accounts to the UPI network.

Faced with UPI’s rapid rise and government pressure, Visa and Mastercard have had to adapt. They have begun collaborating with fintech companies to integrate their services into UPI-enabled terminals, used by over 10 million merchants. However, these efforts may be too little, too late, as credit cards’ share of India’s digital payments fell from 43% in 2018 to 21% in 2024. If they fail to leverage this opportunity, the challenge for these global giants will only grow steeper.

By: Nestor Castillo, ForAllTechNews Director