The world of digital payments, which was deemed a revolution in itself not long ago, is witnessing a quiet revolution within its own ecosystem. The new favourite of scan-and-pay generation is the UPI-enabled credit cards which are rapidly becoming the preferred choice for millions of Indians. A recent report by Kiwi, a credit-on-UPI platform, shows that CC on UPI is outpacing traditional credit cards in transaction numbers.
But why is this shift happening, and what does it say about the credit-taking habits of India?
The data shows that customers using credit cards enabled with UPI are making an average of 40 transactions per month, which is almost eight times more than traditional credit card users. This usage is growing by 20 per cent month-on-month, and the average monthly spending per user now stands at Rs 40,000 with a steady 5 per cent monthly use.
What is contributing to this growing acceptance?
The report noted that UPI credit cards are becoming the new favourite because of their small transaction size which is roughly Rs 1,125.
This transaction value is way lower than the Rs 4,000 average for traditional credit cards. This makes the UPI credit cards an ideal choice for everyday purchases such as buying groceries, dining out, or shopping at local retailers.
The report further notes that 75 per cent of UPI-enabled credit card transactions are happening at small stores, benefitting local businesses and soldering economic inclusivity.
The Demographic Touch
The tech-savvy cohort, i.e. the youth has been quick to adopt this new payment method. Nearly 45 per cent of UPI-enabled credit card users are under the age of 30, and another 30 per cent are between 31 and 40. This demographic shift highlights a growing trend; younger Indians are seeking more versatile and tech-friendly payment options.
The expansive UPI network, with its 320 million merchant touchpoints, has played a significant role in this adoption, far surpassing the reach of the 9 million POS terminals used by traditional credit cards.
Geographical Divide: The geographical spread of UPI-enabled credit cards shows that metro cities are more welcoming of this payment system because of its urban gentry. Among metro cities, Bengaluru leads the charge followed closely by Hyderabad, Delhi, and Mumbai.
In non-metro cities, Pune has been the most adoptive of CC on UPI followed closely by Ahmedabad, Jaipur, Indore, and Chandigarh. This broad adoption across urban and semi-urban areas shows that there has been a widespread spread of UPI-integrated credit solutions.
Virtual cards Are The New Favourite: Half of the new credit cards issued in 2024 were virtual, providing secure and hassle-free digital access to credit users. The data shows that Rupay’s share of the credit card market jumped from 3 per cent to 12 per cent.
Says Mohit Bedi, Co-founder of Kiwi, “By combining the convenience and widespread acceptance of UPI with the power of credit, we are seeing a new wave of financial inclusion.” The roots of this transformation can be traced back to June 2022, when the Reserve Bank of India allowed the integration of UPI with NPCI’s Rupay credit cards.
UPI credit cards are marking up a bigger space in the credit market today because of their transaction sizes and higher frequency as a win-win solution for both consumers and merchants.
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