Credit Cannibalism

NPCI's success with the RuPay credit card is coming at the cost of its own credit line on UPI

- Prathik Desai

Just about a year ago, the Reserve Bank of India (RBI) gave a shot in the arm to India’s already booming digital payments ecosystem. It allowed banks to extend a pre-sanctioned credit line to its customers through the National Payments Corporation of India’s (NPCI) Unified Payments Interface (UPI). A year on, the shot has provided limited stimulus. And standing in its way is NPCI’s own RuPay credit card.

Launched last decade, the RuPay was NPCI’s answer to the market domination of Visa and Mastercard. In 2022, RuPay credit cards were allowed to be linked with UPI. The RBI helped when it prohibited exclusive deals between banks and credit card companies in March this year and said banks would have to offer customers multiple credit card choices. RuPay gained big. RuPay’s rise has been transformative for India’s credit industry and has challenged the global players. But the success of RuPay has placed NPCI’s other creation—the credit line on UPI—at a significant disadvantage.

With RuPay cards linked to UPI, there remains no reason for banks to offer a credit line through UPI and little reason for consumers to use the feature.

RuPay’s Big Bite

The RuPay credit card has seen significant uptake in recent months and especially since the RBI forbade exclusive deals between banks and network credit cards. Since its integration with UPI, the market share of RuPay credit cards has more than tripled from 3% in the 2023 fiscal to 10% in 2024, according to an estimate by fintech start-up Kiwi. Currently, around 30% of newly issued credit cards in India are on the RuPay network, up from just 5% in the 2023 fiscal.