UPI credit cards will grow massively in next 1-2 years, says Riya Bhattacharya of Rio Money

Once a user starts using a UPI credit card, it becomes a daily habit. This is why UPI payments are a huge market to tap into with its size almost three times the size of the credit card market, Riya Bhattacharya, founder of a fintech startup Rio Money tells MintGenie in an email interaction recently.

She also shares with us the key reasons for the likely popularity of credit cards linked to the UPI. The maximum demand for these cards is seen among the people in the age group of 22 to 40, she further informs.

For the uninitiated, National Payments Corporation of India (NPCI) launched RuPay credit cards on UPI in September 2022. This program enables users to link their RuPay credit cards to UPI apps in order to make payments.

Edited Excerpts

Can you tell us how credit cards linked to UPI make the digital payment experience different from the usage of regular credit cards?

The experience of UPI-linked credit cards cannot be matched by regular credit cards. Hence we are seeing that once a user starts using UPI Credit Cards, it becomes a daily habit for them. Here are the reasons why we are seeing this trend. UPI is everywhere and works at over 10 crore merchants versus only 10 lac POS machines. This makes acceptance of UPI Credit cards much higher to traditional Credit cards.

Even small payments are possible using UPI Credit Cards unlike traditional credit cards. Increasingly, the generation which has started earning in the last 5 years are UPI first and prefer to use UPI for its convenience.

On average, a traditional credit card is used only 4 times a month. Compared to this, UPI payments are done on a daily basis by users.

Usually, UPI payments are dominant in the small payment ecosystem. What is the average transaction size of credit cards linked to UPI?

Typical transaction size is ₹850.

It has been more than a year since RBI allowed credit cards to get linked to the UPI but they are yet to strike a chord with the masses. What are the reasons for what some may call a lukewarm response’?

This is because of lack of awareness among users and we believe that with newer fintech firms coming, this gap will get plugged soon. We expect this to change massively within the next 1-2 years. A parallel to this is the rise of UPI, which got launched in 2015 and took a few years to pick up this massive momentum.

The latest RBI data says that UPI payments touched 2.34 lakh crore in Oct 2024, reflecting an increase of 37% in 1 year. Clearly, UPI payments are growing faster than card payments. Which market UPI credit cards will eat into: credit cards or UPI?

We believe that UPI payments are a much larger opportunity to capture. UPI payments were 23.4 lakh crore in Oct 2024, of which merchant payments were 6.7 lakh crore – this is three times more than credit card market size and is growing faster.

Every sophistication we add to digital payments, the chances of fraud transactions increase. How do you ensure payments happen seamlessly without causing any hassles to regular users?

Ecosystem players including Banks and Fintechs, NPCI and RBI have been working together to educate users and put in system level checks and balances to reduce frauds and failure rates.

As an example, there are several layers of protections being added on the apps itself. We will have to continuously work towards protecting users by improving security and creating awareness.

UPI is quite prevalent among the GenZ and young population whereas the older people are still regular users of credit cards. People in which age group can become accustomed to UPI credit cards, and why?

We are seeing a very high demand coming from users in the age group of 22-40 years. The majority of our users are coming from the age group.