India's digital payments ecosystem is entering a new phase as banks and fintech companies expand UPI-enabled credit cards, allowing users to make Unified Payments Interface (UPI) transactions using credit rather than directly debiting their bank accounts.
Several players-including Kiwi, HDFC Bank, IDFC FIRST Bank, and Axis Bank-have introduced credit cards that can be linked to UPI apps, offering cashback, reward points, and other benefits to attract users. According to a report by The Economic Times, these products aim to combine the convenience of QR-code payments with the advantages traditionally associated with credit cards.
Rise of credit on UPI
UPI credit cards, mostly issued on the RuPay network, allow customers to link their credit cards to popular UPI platforms such as Google Pay, PhonePe, Paytm, and BHIM. Once linked, users can scan QR codes or make merchant payments, with the transaction amount billed to their credit card statement instead of immediately being deducted from their bank accounts.
Industry experts say the move represents a significant shift in India's digital payments ecosystem, where UPI has traditionally been used for direct bank-to-bank transfers.
Key offers from banks and fintechs
According to a report by The Economic Times, fintech platform Kiwi has introduced a UPI-based credit card offering 1.5 per cent cashback on all UPI transactions, with rewards credited to a digital wallet that can later be transferred to a bank account. The card is also marketed as a lifetime-free product and may include additional perks such as complimentary airport lounge access for premium users.
HDFC Bank has launched its RuPay-based UPI credit card offering tiered reward points across different spending categories. According to a report by The Economic Times, users can earn up to 3 per cent rewards on groceries, dining, and supermarkets, 2 per cent on utility payments, and 1% on other eligible purchases including UPI transactions, subject to certain limits.
IDFC FIRST Bank and Axis Bank have also introduced similar products that provide reward points on UPI transactions, welcome bonuses, and potential annual fee waivers depending on spending levels.
Impact on India's digital payment ecosystem
Financial analysts believe the integration of credit cards with UPI could reshape how consumers use credit in India. Traditionally, credit cards were mainly used for large purchases or online payments, while everyday transactions were dominated by UPI.
By enabling credit-based UPI payments, banks may encourage consumers to use credit cards for small-value daily transactions such as groceries, transport, and retail spending.
Experts say the growing adoption of such products could also help expand access to formal credit in India, particularly among younger users who rely heavily on mobile payment platforms.
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