UPI Boosts Credit Card Usage by 8 Times: Young Users Lead the Trend

UPI Boosts Credit Card Usage by 8 Times: UPI's integration with RuPay credit cards has significantly changed consumer payment behavior, driving an 8-fold increase in credit card usage. Young users under 30 years of age are leading the charge, leveraging UPI-enabled credit cards for frequent transactions and higher spending.

How UPI is Changing Credit Card Usage

According to a report by fintech platform Kiwi, UPI-enabled RuPay credit cards have revolutionized how people use credit cards. These users now make an average of 40 transactions per month, a figure 8 times higher than traditional credit card users.

Increased Spending and Convenience

The ability to use credit cards for small, everyday payments through UPI has led to a 20% monthly rise in credit card usage and a 5% increase in spending. Currently, the average monthly expenditure per UPI credit card user has reached ₹40,000.

Market Impact of UPI Integration:
RuPay credit cards, which had only a 3% market share in 2023, now hold 12% of the market in 2024, thanks to UPI integration.

Youth Dominating Usage

Users under 30 contribute 45% of UPI credit card transactions, highlighting the growing popularity of digital payments among younger generations.

City-wise Spending Trends

Top Metro Cities: Bengaluru leads in UPI credit card spending, followed by Hyderabad, Delhi, and Mumbai.
Top Tier-2 Cities: Pune, Ahmedabad, Jaipur, Indore, and Chandigarh are at the forefront.
Potential Risks of Rising Credit Card Usage
While increased credit card adoption offers convenience, it also poses risks:

Debt Dependency: Rising usage for small expenses indicates growing reliance on unsecured credit.
Default Rates: As per TransUnion CIBIL, credit card defaults in India rose from 1.6% in March 2023 to 1.8% in June 2024.
Banking Risks: Higher usage of unsecured credit could lead to an increase in non-performing assets (NPAs) for banks.