RuPay Credit on UPI: How Merchants Can Ride India’s Next Big Payments Wave

RuPay credit cards can now be linked to UPI apps and used to pay any compatible UPI QR, combining the reach of UPI with the power of credit. For merchants, this means credit acceptance is no longer limited to POS terminals or online card forms.

The transaction is authenticated using a UPI PIN, just like any regular UPI payment. The key difference? The money comes from the customer’s credit line instead of their bank balance.

The Numbers Tell the Story

The growth of RuPay credit on UPI has been nothing short of extraordinary. Consider these figures:

➡️ 750 million transactions worth ₹63,826 crore processed via RuPay credit on UPI by October FY25, more than doubling from 363 million transactions and ₹33,439 crore in FY24. (Source: NPCI)

➡️ 16% of all credit card spends now happen on RuPay network, nearly half of that via credit on UPI. (Source: BusinessStandard’25)

➡️ 75% of RuPay credit-on-UPI transactions happen at small merchants, proving broad acceptance. (Source: Analysing NPCI data)

Why This Matters for Merchants

1. Your QR Code Now Accepts Credit

If you already accept UPI payments through a QR code, you’re already set up to receive RuPay credit card payments. There’s no need for a POS machine, card reader, or additional hardware.

2. Higher Consumer Spending Potential

When customers can pay with credit instead of their bank balance, their willingness and ability to spend increases. Credit on UPI unlocks purchasing power that was previously gated behind physical card infrastructure.

3. Favourable MDR Structure for Small Merchants

The National Payments Corporation of India (NPCI) has structured the Merchant Discount Rate (MDR) to encourage adoption. Transactions below ₹2,000 carry zero MDR for small merchants. For transactions above ₹2,000, the interchange fee is borne by the merchant’s bank and not directly by the merchant This makes RuPay Credit on UPI significantly more affordable than traditional card acceptance.

4. Tier-2 and Tier-3 Growth Is Accelerating

A February 2026 government study found that 94% of small merchants have adopted UPI, with 57% reporting an increase in sales after going digital.

What’s Coming Next

The convergence of credit and UPI is only deepening. The RBI has already opened the door to pre-sanctioned credit lines on UPI from scheduled commercial banks, essentially Buy Now, Pay Later built right into the UPI rail. India’s BNPL market is projected to reach ₹30.45 billion in 2026, growing at over 22%. UPI AutoPay mandates have exploded 10x since early 2024, reaching 1.27 billion in November 2025.

For merchants, this means the UPI QR code sitting on your countertop is becoming the most powerful payment acceptance tool in India. It’s no longer just for bank transfers, it’s a credit card terminal, a BNPL gateway, and a subscription billing tool, all in one.

Final Thoughts

The rise of RuPay Credit on UPI isn’t a future trend; it’s happening right now. Consumers are already paying with credit through the same QR code you’ve had for years. The question isn’t whether this shift will affect your business. It’s whether you’ll be ready to capture the opportunity.

Start preparing today. Visit toucanpay.in to explore how our payment solutions can future-proof your business.

Frequently Asked Questions

Q1: What exactly is RuPay Credit on UPI?

A: RuPay Credit on UPI lets customers link their RuPay credit cards to UPI apps (like Paytm, GPay) and pay merchants via any UPI QR, charging it to their credit line instead of a bank account.

Q2: Do merchants pay extra MDR for RuPay Credit on UPI?

A: No MDR for transactions up to ₹2,000 per NPCI’s low-value incentive scheme.

Q3: Can all UPI QRs accept RuPay Credit payments?

A: Yes, any standard UPI QR from an NPCI-compliant PSP/gateway supports it automatically.

Q4: Will customers get the same rewards on UPI as card swipes?

A: Yes, NPCI mandates full rewards parity for RuPay credit on UPI since Sep 2024, making it more attractive than before.