UAE President Mohammed bin Zayed Al Nahyan himself used the card to make a digital payment. Since then, the government of Prime Minister Narendra Modi has been aggressively pushing the RuPay card as part of a larger strategy to internationalise the Indian currency and become a credible player in the global financial payments system.

RuPay usage, unlike the Unified Payments Interface (UPI), is yet to pick up despite a sharp increase in the number of cards issued in the last couple of years. Though no official estimates are available, industry sources said about 750 million RuPay cards -- debit and credit cards combined -- are now in circulation. The boom in card issuance is yet to pay off, however. 

A closer scrutiny of data published by the National Payments Corporation of India (NPCI) reveals that the volume of transactions on RuPay cards has been lower in 2023-24 compared to the previous financial year. And while the value of the transactions has remained more or less the same, the spending at points of sales (PoS) or retail outlets has actually reduced in 2023-24 compared to the previous financial year.   

In 2022- 23, RuPay transactions at PoS stood at Rs 1.63 lakh crore. But in 2023-24, it slowed to Rs 1.55 lakh crore, a difference of about Rs 8,100 crore. Similarly, the volume of transactions, recorded at 860 million in 2022-23 at PoS, reduced to 695 million in 2023-24.

However, RuPay transactions for e-commerce were higher. Total RuPay transactions -- PoS and e-commerce together -- were, therefore, a tad higher in 2023-24, Rs 24.49 crore compared to Rs 24.46 crore in 2022-23.

RuPay Galore 

Almost all major banks have been issuing RuPay cards—both debit and credit. 

In September 2022, NPCI linked RuPay credit cards with UPI, a move aimed at encouraging cardholders to increase spending on this Made in India flagship product while showcasing India’s rising influence in the digital payments space. However, banks started to link their credit cards with RuPay only from late last year.

Another key reason for slowing transactions on RuPay credit cards could be a higher merchant discount rate – a fee levied on merchants on the use of this particular plastic money. RuPay credit cards, which have witnessed a jump in subscription, attract a merchant discout rate of 2 per cent though no fee is charged for transactions up to Rs 2000. This is higher than what other credit cards charge, which is around 1.5 per cent to 1.8 per cent.

Ankush Dixit, founder, Multiply, a platform tracking credit card industry, wrote on LinkedIn that RuPay credit cards might have skyrocketed but merchants aren’t happy with this growth. “So much so, that they have asked banks to disable RuPay-based credit card payments on UPI,” he noted.

Mails sent to NPCI did not elicit any response.

A senior official handling the cards division at a large public sector bank said on condition of anonymity that overall spending on RuPay debit cards may have taken a hit as customers prefer using UPI instead of plastic money. 

“The trend is perplexing as the number of RuPay cards issued has been steadily rising. But this could be due to a drop in usage of RuPay debit cards as most users now prefer making payments through UPI. But my guess is that credit cards spends have increased … the hit is due to the fall in usage of RuPay debit cards,” the official said.

Other experts explained that merchant acceptance and fees charged by the company that processes the card usage are often determining factors in usage growth. "RuPay credit card transactions on UPI showed exceptional growth until late last year, with transactions almost doubling in 6 months by October 2023. However, the January-March period this year has seen a minor decline. This can be ascribed to certain barriers like merchant acceptance and high MDR," Abhilasha Jaju, Director, BFSI vertical, 1Lattice, a tech-enabled decision support organisation, said.

She pointed out that higher commissions are associated with UPI transactions through RuPay credit cards as compared to other payment methods, resulting in merchant resistance. "Unlike Point-of-Sale (POS) systems, both small and large merchants face considerable hurdles when negotiating lower MDR (Merchant Discount Rate) on UPI platforms. These challenges in the industry have somewhat held back the growth potential of RuPay credit card transactions on UPI,” Jaju added. 

Measures To Push RuPay

The government and regulatory authorities including the Reserve Bank of India (RBI) are working on ways to boost RuPay card usage. Several steps have been taken.

Last month NPCI unveiled the ‘RuPay Link it, Forget it’ campaign at the Indian Premier League. The campaign, conceptualised by DDB Mudra Group, is aimed at increasing awareness about RuPay credit cards and its features.

“RuPay's innovative offering of linking credit cards on UPI marks a transformative moment in the payments space, fundamentally altering how credit cards are perceived and used," Ramesh Yadav, Chief Marketing Officer at NPCI, had said in an earlier statement.

"Through the 'Link it, Forget it' campaign, RuPay is not just presenting a different payment method but also positioning itself as a simple yet essential go-to choice in the gamut of options available today,” Yadav said, adding that the novelty and ease of use are what sets the brand apart and “makes it more than just a credit card.”

The RBI has now allowed banks to issue RuPay Prepaid Forex cards as well. This is expected to help the acceptance of the card outside the country.

Internationalisation Of RuPay

With the increase in geo-economic risks, India has been aggressively trying to popularise RuPay in other countries. Apart from the UAE, several countries such as Nepal, Bhutan and Singapore, besides others have also launched the RuPay card.

The RBI has said that it is working to launch the RuPay card in more countries. An analyst said that the issue was not how many countries accept RuPay cards but rather the volume of its usage abroad. “The focus must be on increasing its usage, is it happening in other countries--that is the question." 

RuPay cards, besides competing with other international payment networks such as Visa and Mastercard, are also expected to ensure payment security to India amid rising global uncertainty. But the existing roadblocks need to be removed.

China’s own payments platform UnionPay that hit the market in 2002 is now accepted in almost all countries.   

“Payments system can be weaponised today and we cannot depend on other countries’ mercy. We have to be self-reliant when it comes to payments,” Swadeshi Jagran Manch (SJM)’s national co-convenor Ashwani Mahajan said. 

Earlier, Modi had said that the UPI along with RuPay was not just low cost with highly secure technologies, but they have also become India’s identity in the world.

According to data portal Statista, despite the increase in RuPay card issuance, the market share of the domestic card brand did not reach the same heights in India as either Visa or Mastercard, which currently dominate the market in the country.

Launched in 2012, RuPay is just 12 years old but the need of the hour now is to carve out a well-thought-out strategy to expand its market share and acceptance in India and abroad.