Why India’s UPI Revolution Is Now Moving to Credit Cards?

UPI has transformed the way India pays from buying vegetables at a roadside stall to settling bills at premium restaurants, the quick scan-and-pay experience has become second nature to millions. But until recently, there was one limitation: UPI payments came directly from bank accounts, offering convenience but little in the way of tangible rewards.

That’s changing fast. The next wave in digital payments is here UPI Credit Card.

The Shift: From Bank Accounts to Credit Lines

When the Reserve Bank of India and NPCI enabled UPI to accept credit cards, it unlocked a new form of payment flexibility. For consumers, this means they can now tap into their credit line while paying any UPI merchant, combining the speed of UPI with the financial leverage and reward benefits of a credit card.

For small businesses and local vendors, it’s business as usual, they simply continue to accept UPI without changing their infrastructure. But for consumers, it’s an opportunity to turn everyday transactions into reward-earning opportunities.

Where It Works

The best part? UPI credit card payments work at the same places you already shop, from tea stalls, local salons, and fruit sellers to supermarkets, restaurants, and large retail outlets like DMart. A quick scan of the QR code, and the purchase is billed to your credit card instead of debiting your bank account.

The Rewards Angle

This shift is more than just convenience, it’s a chance to earn on payments that previously went unrewarded. Traditional credit cards already offer cashback and points for offline and online spends, but they rarely extended to small-ticket UPI transactions. Now, every cup of chai or grocery purchase can contribute to your rewards tally.

An Example: Kiwi’s Approach

Among the first movers in this space is Kiwi, a fintech platform that offers a RuPay Credit Card designed for UPI payments. Kiwi cardholders earn 1.5% real cashback on everyday offline UPI spends, credited directly to their bank accounts. For premium users (₹999 annual fee), rewards can go up to 5% cashback along with complimentary lounge access.

Unlike typical reward structures, Kiwi’s programme is refreshingly transparent,cashback is real money that can be withdrawn to a bank account, without hidden terms or complex conversions. Accepted at all small merchants that take UPI, and at large chains alike, it turns everyday UPI payments into an easy earning habit.

Who Should Consider It

UPI credit cards aren’t for everyone. They work best for people who:

• Already use credit cards and understand how to manage credit responsibly.
• Are comfortable with digital payments.
  
• Want to maximise cashback and rewards on small and large offline purchases.
  

For freelancers, startup founders, or salaried professionals who live in UPI-first ecosystems, it’s a way to get more value without changing spending habits.

The Road Ahead

With more banks and fintechs joining the UPI credit card ecosystem, adoption is likely to rise sharply over the next two years. As reward structures get more competitive, consumers will have greater choice, and the market will reward those who can combine convenience, transparency, and strong merchant acceptance.

For now, the concept is still gaining awareness. But as more people realise they can pay their local chaiwala or a big-box retailer using a credit card via UPI — and earn cashback for it — this could become the default payment method for a new generation of Indian shoppers.

Fintechs like Kiwi are already leading the way, offering RuPay Credit Cards linked to UPI with real cashback, simple reward structures, and lifetime free benefits. Their model shows how the blend of UPI’s universal acceptance with the perks of credit cards could set the standard for India’s payment future.