India’s Digital Payment Strategy Challenges Visa and Mastercard
India’s digital payment landscape is undergoing a significant transformation, with indigenous platforms like the Unified Payments Interface (UPI) and RuPay gaining prominence. This shift is impacting the market share of global payment giants Visa and Mastercard.
Rise of UPI and RuPay
UPI, launched in 2016, has become a dominant force in India’s digital payments ecosystem. By December 2023, UPI reached a record 7.829 billion payments, totaling INR 12.82 trillion ($163.1 billion), up 71% year over year. RuPay, India’s domestic card payment network, has also expanded its footprint, issuing more than 700 million cards and dominating the country’s debit card market.
Impact on Visa and Mastercard
The growing adoption of UPI and RuPay has led to a decline in the market share of Visa and Mastercard in India. The Indian government’s push for digital payments and financial inclusion has further accelerated this trend. Notably, the implementation of zero Merchant Discount Rate (MDR) on all RuPay and UPI transactions in January 2020 made these platforms more attractive to merchants and consumers.
Government Initiatives and Future Outlook
The Indian government’s support for indigenous payment systems aims to reduce dependency on foreign networks and enhance the security and efficiency of digital transactions. As UPI and RuPay continue to innovate and expand their services, Visa and Mastercard may need to adapt their strategies to maintain relevance in the evolving Indian market.
