India’s United Payments Interface (UPI) continues not only to dominate the payments landscape but to grow at a relentless pace. As new players attempt to enter the market, however, concerns are emerging that UPI may be crowding out other payment modes—such as credit cards—potentially stifling innovation and limiting consumer choice.

Still less than a decade old, UPI is rapidly closing in on half a billion users. It processed 59.3 billion transactions in Q3, up from about 44.4 billion in Q3 2024. It has also overtaken Visa to become the world’s largest real-time payments system, handling around 640 million transactions per day, compared with Visa’s 639 million.

The strongest growth has come from merchant payments, which rose 35% year over year to 37.46 billion transactions. Peer-to-peer transactions also expanded, increasing by 29% over the same period.

Other Methods Are Slipping

Other payment rails have struggled amid UPI’s rise. Transactions on RuPay, the card network run by the National Payments Corporation of India (NPCI), have been declining steadily. In 2023, RuPay processed 1.2 billion transactions, but that figure fell to 938 million in 2024 and to 664 million swipes through November 2025.

UPI’s popular QR code payments are increasingly taking share from card swipes, once the dominant form of digital payment in India. Active UPI QR codes grew 21% over the past year. These codes replace traditional card-swiping machines, bringing millions of small merchants into the digital payments ecosystem.

Although India has a population of more than 1.4 billion, fewer than 50 million people currently hold a credit card, suggesting strong potential for growth. Even here, however, the momentum appears to be slowing. According to data from CareEdge, credit card spending in India rose 23% year over year in September 2025, down slightly from the 24% growth recorded in September 2024.

Debit card usage, meanwhile, has fallen sharply. According to the RBI, debit card transactions declined from roughly 5 million in 2019 to about 1.7 million in 2024.

Competitors Arise

Competitors are still attempting to penetrate the market. Google Pay has introduced its own digital credit card, Flex, while remaining deeply integrated with UPI, having processed about 7.2 billion UPI transactions in October.

Similarly, IndiGo, India’s largest domestic airline, introduced a co-branded credit card tied to its loyalty program through partnerships with Kotak Mahindra Bank and IDFC First Bank. It became the first major Indian airline to do so.

Better Options for Merchants

The Immediate Payment System (IMPS), an Indian inter-bank fund transfer mechanism, is also losing traction, with transactions falling to 368 million in November from 407 million a year earlier.

“UPI is growing and taking transaction volume away from the legacy IMPS network based on its better user interface,” said Don Apgar, Director of Merchant Payments at Javelin Strategy & Research. “Perhaps more importantly, UPI is free for merchants right now, meaning there are no merchant discount fees. Merchants are likely to be actively promoting UPI as their preferred payment option for customers.”

How Long Can the Government Prop Up UPI?

The Indian government has aggressively promoted UPI adoption over the past decade. In addition to keeping merchant costs low or nonexistent, it has even considered offering consumer incentives, such as discounts for paying via UPI rather than credit cards, which typically carry merchant fees of around 2%. The absence of fees is one reason Google is exploring credit products, which offer higher revenue per transaction.

RBI has also announced plans to raise UPI transaction limits, opening the system to more business-to-business payments. Previously, merchant transactions were capped at roughly $1,162, forcing users to split larger purchases or turn to alternative payment methods. Recently, the NCPI was granted the authority to lift limits on both person-to-person and merchant UPI payments.

The question now is how long RBI will continue to offering incentives for a system that has already proven to be wildly successful.


“The central bank of India is still subsidizing UPI through this growth phase, but local payments experts acknowledge that’s not sustainable,” Apgar said. “At some point a merchant discount fee will become part of UPI.”