How RuPay Credit Cards Help Fuel Growth for Small Businesses in India

Small and medium-sized enterprises (SMEs) form the heartbeat of India’s economy. With over 63 million units spread across the country, SMEs contribute nearly 30% of India’s GDP, account for 45% of industrial output, and employ more than 110 million people (MSME Ministry, 2024). Yet, despite their scale, many small businesses face challenges in accessing affordable finance, accepting digital payments, and integrating into the formal financial system.

In this landscape, RuPay credit cards in India, especially after their integration with the Unified Payments Interface (UPI), have emerged as a game-changing tool. They not only enable smoother customer transactions but also provide small merchants with a cost-effective, inclusive, and scalable payment solution. Beyond mere transactions, RuPay is helping SMEs improve margins, expand customer reach, and even gain access to credit lines that were previously out of reach.

Statistical Snapshot: RuPay and SME Impact

RuPay’s Evolution: India’s Homegrown Network

RuPay was launched in 2012 by the National Payments Corporation of India (NPCI) with the vision of reducing dependence on global card networks like Visa and Mastercard. It was designed to be a domestic alternative that could deliver secure, cost-effective, and inclusive payment solutions tailored to Indian needs.

The watershed moment came in June 2022, when the Reserve Bank of India (RBI) allowed RuPay credit cards to be linked with UPI. This integration enabled users to make credit-based payments using familiar QR codes and UPI apps, effectively blending the popularity of UPI with the flexibility of credit.

As of 2025, RuPay has grown to over 111 million credit cards in circulation, and its acceptance is rapidly expanding both in India and internationally. Its “India-for-India” model ensures lower costs for merchants, while its UPI integration has made it the fastest-growing credit card network in the country.

Market Adoption & Growth Surge

The adoption of RuPay credit cards has been nothing short of spectacular. According to NPCI:

• RuPay now accounts for 16% of India’s credit card spending, up from single digits just a few years ago.
• Half of these transactions are happening via UPI-linked RuPay cards, showing how deep the UPI-credit synergy runs.
• In the first nine months of FY25 (April–December), RuPay recorded 750 million transactions worth ₹63,826 crore, nearly doubling the figures from FY24 (362.8 million transactions worth ₹33,439 crore).

UPI credit card transactions as a whole have also accelerated, crossing ₹638 billion in the first seven months of FY25, which represents a doubling year-on-year. The share of credit cards in overall UPI transactions has grown from 10% in 2022 to 28% in 2025, reflecting strong consumer preference for this hybrid model.

Equally important, non-metro cities are driving this growth. Since 2019, credit card spending outside metros has risen by 175%, compared to 1.5× in metro cities. This shift signals that RuPay is expanding beyond affluent customers in big cities and penetrating into Tier-2 and Tier-3 India—precisely where small businesses operate in large numbers.

For SMEs, this means more customers with RuPay cards in their wallets, leading to higher acceptance rates and more digital sales opportunities.

Lower Costs, Higher Margins for Small Merchants

One of RuPay’s biggest advantages for small businesses is its cost-effectiveness.

• Lower interchange fees: RuPay credit card transactions typically attract 0.4–0.6% fees, compared to ~2% on global networks. This difference can significantly improve profit margins for businesses operating on thin spreads.
• Exemptions for micro-merchants: RBI has mandated that businesses with an annual turnover of less than ₹5 lakh are exempt from UPI merchant discount rates (MDR). This ensures that small traders—such as kirana shops, vegetable vendors, and local service providers—can accept digital credit payments at zero cost.
• No need for expensive POS devices: Unlike traditional card acceptance, which required point-of-sale (POS) machines costing ₹7,000–₹10,000 upfront plus maintenance charges, RuPay-UPI transactions can be done using simple QR codes.

Driving Inclusion in Semi-Urban and Rural India

India’s financial inclusion story is incomplete without mentioning its semi-urban and rural entrepreneurs. Historically, these businesses have faced limited access to affordable digital payment options. RuPay is helping bridge this gap.

• Spending patterns: According to SBI Cards (FY25), average monthly RuPay UPI credit card spending is ₹18,000 in smaller towns, compared to ₹14,800 in metros. This indicates that customers in non-metros are not only adopting credit-based UPI but also spending more per month than their metro counterparts.
• Transaction growth: Tier-2 and Tier-3 cities have seen a 4× surge in credit card spending since pre-COVID levels, far outpacing metro growth.
• Ease of acceptance: A vegetable vendor in Lucknow, a tuition teacher in Indore, or a mechanic in Coimbatore can now accept credit card payments simply through a QR code, without investing in hardware.

This democratization of digital credit acceptance allows small-town businesses to expand their customer base, retain buyers who prefer credit, and integrate into the broader digital economy.

Expanding Credit Access for Small Businesses and Customers

Credit has long been a bottleneck for India’s SMEs. Traditional loans often require collateral and lengthy paperwork, which many small entrepreneurs cannot provide. RuPay-UPI integration is changing this by expanding micro-credit access in two ways:

1. For Customers:
   Customers can now use their RuPay credit cards for everyday purchases via UPI QR codes, even at small shops. This encourages higher customer spending at SMEs and ensures that small businesses capture more sales.
2. For Merchants:
   Digital payment trails generated through RuPay transactions provide proof of consistent revenues, helping small businesses build financial credibility. Over time, this data can be used to qualify for working capital loans from banks and fintechs.

Additionally, RuPay credit cards are introducing secured and pre-approved micro-limits for new-to-credit users, especially in rural areas. This allows individuals to start building a credit history with small amounts, creating a pipeline of future credit-ready consumers and entrepreneurs.

Ecosystem Push and Policy Backing

RuPay’s growth is not accidental—it is backed by a strong ecosystem push from both regulators and fintech innovators.

• NPCI incentives: NPCI has been offering banks financial incentives to issue RuPay credit cards, ensuring higher adoption.
• Government support: While the budget allocation for RuPay/UPI promotion dropped from ₹2,000 crore in FY24 to ₹437 crore in FY25, the network still benefits from strong policy advocacy for local payment solutions.
• RBI mandates: Since 2024, RBI has required banks to provide customers a choice of networks for card issuance, preventing exclusive tie-ups with global players and ensuring RuPay gets fair representation.
• Fintech partnerships: Platforms like Kiwi are working with banks to expand RuPay-UPI credit issuance, simplifying onboarding for new users.
• Global acceptance: RuPay credit cards are increasingly being accepted abroad (e.g., Singapore, UAE, Bhutan), which can also benefit Indian SMEs engaged in cross-border trade or tourism-related businesses.

Challenges and Road Ahead

Despite its success, RuPay faces a few hurdles:

• Budget constraints: Government’s promotional budget for UPI/RuPay has been cut, which could slow momentum.
• Global competition: Visa and Mastercard still control ~80% of India’s credit card market, and their global acceptance is higher.
• Awareness gaps: Many small merchants in deep rural areas are still unfamiliar with credit-UPI linkage and its benefits.

However, RuPay’s structural advantages—low cost, UPI integration, and government support—create a strong competitive moat. With growing acceptance in semi-urban and rural areas, and rising demand for affordable credit, RuPay is positioned to become the backbone of small business digitalisation in India.

Conclusion

RuPay credit cards, especially when linked with UPI, are more than just a payment tool. They are enabling cost savings, credit access, and wider customer reach for India’s 63 million small businesses. By lowering transaction fees, democratizing digital acceptance, and helping SMEs build financial credibility, RuPay is fueling inclusive growth across the nation.

As India continues its journey toward becoming a $5 trillion economy, RuPay stands out as a true “Made in India” innovation—empowering small businesses, deepening financial inclusion, and strengthening the country’s digital payment ecosystem.

For India’s SMEs, adopting RuPay is no longer just an option; it’s a pathway to sustainable growth and competitiveness in the digital era.

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