India’s payments market is settling into a new equilibrium as UPI usage soars and credit cards retain their edge in credit and rewards. Salila Pande, MD and CEO of SBI Card, said the two now work in tandem, signaling a shift in how consumers and merchants think about everyday spending and short-term borrowing.
The remark comes as UPI processes billions of transfers each month and credit card spending holds near record levels. It highlights a key trade-off: instant, low-friction payments on one side and access to liquidity and benefits on the other. For a country moving quickly to digital money, that mix could shape how households manage cash flow and how banks grow unsecured lending.
How UPI Changed Consumer Payments
UPI has grown rapidly since its launch in 2016. According to NPCI and RBI data trends, monthly transactions climbed into the tens of billions by 2023 and 2024, propelled by QR codes, bank-to-bank transfers, and near-zero costs for users.
That shift moved small-ticket spending from cash to phones. It also smoothed routine payments like groceries, taxis, and utilities. For merchants, UPI reduced friction at checkout and cut the need to handle cash. The result is a broader digital habit, where consumers reach for a scan even for low-value items.
“UPI and credit cards now complement each other, with UPI boosting usage and cards offering liquidity, rewards and flexible credit,” said Salila Pande, MD & CEO, SBI Card.
Her view reflects a maturing market: UPI primes daily usage, while cards step in when buyers want to split payments, tap offers, or buffer expenses.
Why Cards Still Matter For Liquidity
Credit cards remain a key tool for spreading costs and building credit history. Revolving credit, EMI conversions, and statement cycles help households manage timing gaps between income and expenses. For banks, cards offer risk-managed lending with underwriting, limits, and clear repayment schedules.
Rewards add another layer. Issuers use cashbacks, co-brands, and category bonuses to steer spending. That makes cards attractive for travel, dining, and e-commerce, even as UPI handles day-to-day payments. RBI data in recent years shows card spends near historic highs, suggesting that higher-value purchases still favor plastic.
Policy moves may tighten the link. India has enabled credit on UPI in select forms, and the market is testing how credit lines and certain card rails can work with UPI flows. The direction points to more choice at checkout, not less.
Merchant Economics And Industry Response
Merchants weigh cost and speed. UPI is prized for quick settlement and low acceptance costs. Card payments come with fees but can raise average ticket sizes and loyalty. Large retailers often accept both to maximize conversion.
For issuers, the focus is on responsible growth. Unsecured credit cycles can turn if repayment weakens. Lenders have tightened underwriting in parts of the market and sharpened risk monitoring. At the same time, they are investing in fraud controls and tokenized payments to keep digital transactions safe.
Consumer behavior is also changing. Many shoppers split categories—UPI for local and everyday buys; cards for travel, electronics, and online deals. That pattern spreads risk and optimizes benefits, which aligns with Pande’s view of complementarity.
What Consumers Should Know
- Use UPI for instant, low-friction payments and small-value spends.
- Leverage cards for larger purchases, EMI options, and rewards.
- Track repayment dates to avoid interest and fees.
- Enable security features such as spend limits and alerts.
What To Watch: Credit On UPI And Regulation
The next phase will test how credit lines and card-linked options evolve within UPI. Regulators are balancing growth with consumer protection. Clear disclosures, responsible lending, and dispute resolution will be central to trust.
Competition could intensify. Banks and fintechs are vying for top-of-wallet status with targeted offers and simplified checkout. Co-brand cards tied to e-commerce and travel platforms may pull spending from UPI for specific categories, while UPI keeps capturing routine transactions.
Cross-border efforts may also expand acceptance for Indian users traveling abroad, adding more scenarios where both UPI and cards can play distinct roles.
Pande’s message points to an uneasy but productive truce in payments. UPI drives daily engagement. Cards deliver liquidity, rewards, and flexible credit. For consumers, the smart move is to pick the rail that fits the purchase and to keep a close eye on repayment. For the industry, the opportunity lies in safer credit, better rewards, and smoother acceptance—without losing sight of risk. The balance could define how India spends in the months ahead.
