Visa Inc, the ubiquitous US-based payments company, is central to India’s payments infrastructure. According to a top former official at Visa, it processes close to US$100 billion worth of transactions in a year—around 50% of India’s annual credit and debit card spending.

It also played the critical role of being a gatekeeper to India’s payments, helping pass money between cardholders and merchants. Or, at least, it used to before National Payments Corporation of India’s (NPCI) UPI UPI Unified Payments Interface UPI is a real-time digital payments system that’s owned by the central bank-promoted NPCI stole its thunder.

Since its launch in December 2016, UPI has steadily taken over India’s payments ecosystem. One of India’s largest payment aggregators said that 45% of online transactions on its platform was made via UPI in 2020. This was 36.3% a year ago. The company, which processes online payments via multiple payments methods, requested anonymity due to the context of this story.

UPI’s ease of use and aggressive marketing from payments companies such as PhonePe, Google Pay, and Paytm*—is proving to be no match to international card networks. Card companies’ share of digital transactions overall shrunk from 48% in 2019 to 38% in just a year.

Visa, the US$410 billion behemoth, wasn’t spared either. UPI’s rise rise The Ken India’s digital bet paid off: Charting the payments story Read more cut into Visa’s share of spends made via the 850 million debit cards it has in India, says the former Visa official quoted above. From 56% in 2016, it now stands at about 40%. India favouring its domestic card network, NPCI’s Rupay, also played a part in this.

It’s not just an India problem. World over, local card networks have emerged. Countries such as China, Indonesia, Russia, Thailand, and Vietnam have all moved to promote domestic payments. Others, like Brazil, are curious curious The Economic Times Not just Google, the world is watching India’s UPI Read more about UPI.

A few things put Visa in this spot. While it had a payment solution that could have rivalled UPI’s ability to transfer money between individuals, the company was lax in pushing it. Visa also had ambitions to take QR codes wide and develop payment solutions to meet India’s mobility needs, which could have helped it keep pace with UPI. Instead, it found itself boxed-in by competition from national payments networks.

Effectively, UPI has become the source of Visa’s grief in India. And just as personal setbacks are punctuated by the five stages of grief—denial, anger, bargaining, depression, and finally, acceptance—so too was Visa’s response to the UPI deluge.


Arundhati Ramanathan

Arundhati is Bengaluru-based. She is interested in how people use money in the digital age and how new economies will take shape based on that interaction. She has spent over 10 years reporting and writing on various subjects. Previous stints were at Mint, Outlook Business and Reuters.

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