Mass-market credit card customers are increasingly moving towards the RuPay network, as these can also be used to make UPI payments, global consultancy firm Third Bridge has said in a report.

RuPay, the domestic card network run by the National Payments Corporation of India, which also operates UPI, is inching closer to a 40 percent market share in new credit card issuance by banks.

“The mass segment continues to move towards RuPay. It will continue to grow. Mastercard and Visas of the world will get very focused towards affluent customers or affluent cards at the bare minimum fee-based cards,” the report said.

Mass-market credit cards, which are standard or entry-level cards, are largely designed for first-time users, while regular cards, often referred to as premium or super premium, are for high spenders.

RuPay credit cards can be linked to customers’ UPI accounts and used for merchant payments. There are around 10 crore unique UPI merchants in the country and only around 1.2 crore card terminals.

Global majors such as Visa, Mastercard and American Express (Amex) are among the other major networks operating in India.

Around 8 to 9 lakh new credit cards are issued a month, of which around 5 to 6 lakhs remain active. There are around 11 crore active credit cards in India and growing at around 8 percent annually.

RuPay's overall market share of active cards is around 10-12 percent.

The mass-market focus

Most credit cards have an annual fee starting at around Rs 500 and can go up to Rs 15,000 for premium cards. These fees are waived off if the annual spending crosses Rs 1 lakh for mid-segment cards and over Rs 10 lakh for premium cards.

According to the Third Bridge report, fee-based cards account for approximately 40 percent of the industry, representing the core segment being targeted by Visa and Mastercard.

Mass-market credit card users are earners in the Rs 5-10 lakh bracket who opt for cards that carry no annual fees."

“It is difficult for a Visa or a Mastercard or international networks to make money out of it or compete with RuPay in the segment,” the report said.

Regulatory support

The report attributed RuPay’s surge to RBI’s guidelines, which require banks to offer customers a choice of two or more card networks at the time of issuance and renewal.

“The reason being a lot of banks have to stay covered off the RBI guidelines on all network options if you are an issuer with more than one million (10 lakhs) cards in force (CIF), a lot of banks have rolled out RuPay card as an additional card. Whatever card they are launching, they will issue a RuPay as well as an add-on to it,” the report said.

The guidelines are also aimed at promoting the domestic network. While the regulations only say that there should be a second option, it does not necessarily have to be RuPay. Banks tend to opt for RuPay because of the UPI option, which is very popular among customers.

“There are a lot of regulations. There are a lot of things which are currently pro NPCI, which include credit card on UPI, which is becoming big… with all the dynamics and the leaning of the regulator towards NPCI, the market favours RuPay,” Third Bridge said.

RuPay power

A Bernstein report last year estimated RuPay’s issuance share at 40 percent. Moneycontrol reported in November that it was closer to a third, and the network’s share of transaction volumes was nearing 25 percent.

According to the Third Bridge report, RuPay has gained market share.

RuPay’s cumulative monthly transaction value on UPI stands at around Rs 20,000 crore, according to industry estimates.

Its overall monthly spending, including PoS transactions (swipe and tap-and-pay), is estimated at around Rs 38,000 crore, accounting for a market share of 18-20 percent.

More than half of all RuPay credit card transactions are through UPI.

The overall monthly spending across all credit card networks in India is about Rs 2 lakh crore.

Fintechs doing their bit 

Fintechs have been accelerating the adoption as well, with players such as Slice, Kiwi, Scapia, super.money, Uni and Jupiter issuing RuPay cards over the last couple of years.

Slice recently opened up its card issuance to 1.2 million waitlisted customers. The fintechs are focusing on credit card payments through UPI.