How India's UPI DESTROYED America's Visa & Mastercard | The Indian Insight

So in 2022, something strange started happening in India. Visa, a $500 billion giant started losing its grip on the biggest potential market. Between 2019

and 2024, debit card use in India fell by over 60% and at the same time, India's own payment network called UPI grew by almost 90%. Today, UPI processes

almost 20 billion transaction every single month. That's 668 million

single month. That's 668 million transaction every single day. This

coming from a country where just 10 years ago 90% of all the Indians only used cash and even less than 2% of Indians had used a mobile phone to

receive a payment. But today India processes over 180 billion digital payments a year and UPI handles 85% of them. It even powers half of all the

them. It even powers half of all the real-time digital payments in the entire world. So the question is, how did a

world. So the question is, how did a country that was called poor, technologically backward, and overdependent on cash build one of the world's biggest digital payment system?

Section one, the big dog. So in 1958, most Americans paid for everything with either cash or checks. A monthly credit didn't really exist for ordinary people.

So if you wanted to buy something you couldn't afford, you either saved up, got a store specific loan, or you didn't buy it. that Bank of America saw an

buy it. that Bank of America saw an opportunity here. They created a small

opportunity here. They created a small piece of plastic called a credit card.

And the idea was simple. Buy now [music] and pay later. But there was a problem.

No one knew what a credit card was. So

Bank of America did something radical.

They massmailed 60,000 credit cards to resident of Fresno, California without permission. So people just opened their

permission. So people just opened their mailboxes and basically found a free $500 loan. But slowly it caught on.

$500 loan. But slowly it caught on.

People liked buying things without carrying cash. Merchants liked making

carrying cash. Merchants liked making more sales and Bank of America made more money every single time someone used their card. By 1976, this became Visa.

their card. By 1976, this became Visa.

Other banks watched this happen and panicked that Bank of America was building a monopoly. So in 1966, a group of competing banks met in Buffalo, New York, and created their own network.

They called it the Interbank Card Association. By 1979, it became

Association. By 1979, it became Mastercard. And just like that, two

Mastercard. And just like that, two giants were born. They signed up millions of merchants worldwide combined. [music]

combined. [music] They control 90% of all card payments outside China. Visa alone handles 52% of

outside China. Visa alone handles 52% of all the credit cards globally and 60% of all debit cards. If you buy something online, there's a 90% chance Visa

processes it. [music]

processes it. [music] Their combined value is over $1 trillion. That's more than Walmart,

trillion. That's more than Walmart, Disney, and Netflix combined. But the

most shocking part is Visa's profit margin are 55%. Mastercards are 45%.

Most businesses barely make 5 to 10%. So

Visa and Mastercard make more profit per dollar than almost anyone. More

importantly, nobody could compete with them because they build a track. So

imagine you're a small shopkeeper. Visa

approaches you and says let your customer pay with cards you will make more sales. Sounds good, right? But

more sales. Sounds good, right? But

there is a rule called honor all cards.

So if you accept one Visa card, you must accept all Visa cards including premium ones that charges you 3% instead of 1.5%. Now multiply this across every

1.5%. Now multiply this across every merchant in the world. The entire cost of rewards program, the cash back, the airline miles, the lounge access gets

paid by merchants, not by Visa, not by banks. So merchants had three choices.

banks. So merchants had three choices.

Absorb the cost, pass it to customer or just don't accept cards. And in India, this is why you see signs everywhere that no cards below 500 rupees, 2% extra

on card payments. On a 50 rupees vegetable purchase, the 2 to 3% fee meant the shopkeeper lost money. The

margin on street food is that thin. For

60 years, this system ran the world. But

then in 2016, something strange started happening in India. Section two, the underdog. In 2009, India faced a serious

underdog. In 2009, India faced a serious issue. There were over a billion people,

issue. There were over a billion people, but almost no one used digital payments.

India recorded just six digital payments per person per year. For comparison, the US was already doing over 500 plus.

India had only six lakh retailers who were set up to accept card payments. So

the infrastructure barely existed and people weren't using them. Why? Because

it was expensive and it was complicated and nobody trusted it. Bank transfers

requires you to know the recipient's account number, the IFSC [music] code and bank details. Right? Mobile wallets

only worked if both people use the same application and cards required expensive machines and fees that small vendors couldn't afford. So one fine day, the

couldn't afford. So one fine day, the Reserve Bank of India looked at this mess and realized something. India

couldn't just copy what the West did. In

India, most transactions were tiny like 20 rupees for snacks, 50 rupees for auto ride, 100 rupees for lunch. Cars

couldn't capture this market. [music] So

India decided to build something different. In 2009, the government

different. In 2009, the government created the National Payment Corporation of India, NPCI. The [music] goal was very simple. make digital payments free,

very simple. make digital payments free, instant, and easy for everyone. Not as a business, but as a public infrastructure like roads and electricity. 7 years

later, in April 2016, NPCI launched UPI.

And suddenly, the whole payment experience changed. You didn't need a

experience changed. You didn't need a card. You didn't need a special machine.

card. You didn't need a special machine.

All you needed was a phone, a bank account, and a QR code. Any app could connect to any bank, and it was free.

But at first, nobody cared. In the

entire year of 2016, UPI processed just 2.65 million transactions. That sounds

like a lot until you realize Visa processes that many in few hours if not minutes. People didn't trust putting

minutes. People didn't trust putting their bank details in an app. They

didn't understand how it worked. So cash

was easier. UPI was failing. But then on November 8, 2016, everything changed >> that the 500 rupee

and 1,000 rupee currency notes presently in use will no longer be legal tender from midnight tonight. Prime Minister

midnight tonight. Prime Minister Narendra Modi appeared on national television and made a shocking announcement. [music]

announcement. [music] Starting at midnight, all 51,000 notes would be invalid. 86% of India's currency was about to become worthless.

India went cashless. So the government moved fast. They promoted QR codes to

moved fast. They promoted QR codes to merchant across the country. A

shopkeeper could stick a paper QR code on his wall and suddenly he could accept digital payments. Payment app started

digital payments. Payment app started offering cash back. 50 rupees if you make your first payment, 20 rupees if you refer a friend. And it worked. By

October 2018, just 2 years later, UPI processed 482 million transaction.

That's a 4,800x increase. Total digital

payment transaction in India grew by 207% in just 2 [music] years. But then

came another big event that many people don't pay attention to. In March 2020, India went into lockdown due to co suddenly touching cash felt dangerous.

Handling notes to a shopkeeper meant physical contact, right? and ATMs they became potential infectious zones.

People were afraid so UPI became the answer to everything contactless, safe and instant. I believe demonetization

and instant. I believe demonetization introduced India to UPI but it was coid9 that made it a habit. Between March and August 2020 the peak of pandemic Indians

transacted 14.26 26 lakh k through UPI that was 33% of all UPI transaction from 2016 to 2020 compressed into just 6

month transaction values in March 2021 grew 103% compared to the year before by 2020 India became the world's largest

real-time payment market with 25.5 billion annual transaction the pandemic didn't just accelerate the UPI it changed behavior permanently people kept

using their mouth amount of convenience even after the pandemic ended. Today,

UPI accounts for 84% of all the digital payments in India. Over 65 million merchants accepted. That's a three times

merchants accepted. That's a three times more than the number of merchants who accept cards. The underdog didn't just

accept cards. The underdog didn't just compete, it won. But winning in India was just the beginning. Section three,

the fight. So, UPI is free and Visa charges fees. Simple, right? No, we need

charges fees. Simple, right? No, we need to peel back the surface layer and understand some more technicalities. So

in short, here's how Visa works. You

walk into a shop and buy something for 100 rupees. When you tap your card and

100 rupees. When you tap your card and pay, your bank and the shop's bank don't talk to each other directly. Instead,

Visa checks and verifies if all your details are okay, passes the message to the shop's bank and make sure that the money is securely transferred. For the

service, the shop pays a small fee of about two to three% which is shared by your bank, the shop's bank and Visa.

That's it. Visa is basically the middleman. The entire $700 billion

middleman. The entire $700 billion valuation depends on being that middleman. It's the most profitable

middleman. It's the most profitable position in the entire financial system.

But UPI cut off the middleman entirely.

Your bank talks directly to the shops bank through NPCI's infrastructure and money just moves instantly. And this is why UPI is a danger to these companies because if other countries start

building similar systems, they won't need Visa and Mastercard just like India doesn't. Between 2019 and 2024, debit

doesn't. Between 2019 and 2024, debit card usage in India was reduced by 60%.

People stopped using card entirely. Now

they are used almost exclusively for ATM withdrawals. But you know, debit cards

withdrawals. But you know, debit cards were never Visa's main business. Credit

cards were. And credit cards seem safe because Visa and Mastercard do something crucial there. So when you swipe a

crucial there. So when you swipe a credit card, Visa checks with your bank whether you have enough credit available. It also verifies a card isn't

available. It also verifies a card isn't stolen. It flags suspicious transaction.

stolen. It flags suspicious transaction.

It even takes on fraud liability in certain cases. So they are the

certain cases. So they are the gatekeeper. But then India changed that

gatekeeper. But then India changed that game as well. In September 2022, NPCI introduced credit lines on UPI and more importantly made it exclusive for our

own rupe credit card. So, how it works is your bank pre-approves a credit limit and links it directly to your UPI ID. No

physical card need detail. When you walk into a shop and scan a QR code, you choose credit as your payment source.

Your bank instantly checks if you have available credit. The transaction

available credit. The transaction settles through UPI infrastructure in seconds. So, the bank does the

seconds. So, the bank does the authorization. The bank handles fraud

authorization. The bank handles fraud detection. The bank takes the risk. NPCI

detection. The bank takes the risk. NPCI

provides the system and the fee still zero. [music] Visa and Mastercard are

zero. [music] Visa and Mastercard are not needed at all. By June 2024, Rupe captured 50% of all the new credit card issued in India. Its overall market

share jumped from 3% to 18% by October 2025. Rupe credit card transaction

2025. Rupe credit card transaction doubled yearover-year reaching 750 million transaction worth 63,826

K in just 7 month of financial year 2025. UPI didn't compete with cards for

2025. UPI didn't compete with cards for big purchases. It digitized [music] the

big purchases. It digitized [music] the transaction cards couldn't touch. And

now with credit on UBI, it's coming for everything else. And the world is

everything else. And the world is watching because the real deal is the image [music] it creates on a global scale. Section 4 geopolitical power. On

scale. Section 4 geopolitical power. On

February 24, 2022, Russia invaded Ukraine. USA announced sanctions on

Ukraine. USA announced sanctions on Russia and then within 9 days, Visa and Mastercard suspended all their operations in Russia. Now, think about it for a second. [music] Visa and

Mastercard didn't do this on their own, right? They were complying with the US

right? They were complying with the US government sanctions, just following orders. Because Visa and Mastercard are

orders. Because Visa and Mastercard are US companies, which means even if they wanted to stay neutral, even if they thought cutting off Russia was wrong, they couldn't. US law controls them. And

they couldn't. US law controls them. And

by extension, US law controls 90% of global payments outside China. And this

wasn't even the first time. In the

2010s, Visa and Mastercard enforced US sanctions on Iran. And it gets worse.

Between 2023 and 2024, an investigation uncovered that Iranbacked militants in Iraq were exploiting Visa and Mastercard networks to evade sanctions. They use

complex crossber transaction schemes to extract $1.5 billion every single month.

And here's the shocking part. Visa and

Mastercard knew. The US Treasury sent warnings, but for months the companies did nothing. Why? because they were

did nothing. Why? because they were making money. Visa and Mastercard

making money. Visa and Mastercard collectively made around $120 million from these activities in 2023. So this

is a world that India saw and India decided that it had to protect itself.

UPI wasn't just about making payments free or convenient. It was about sovereignty. In February 2024, UPI

sovereignty. In February 2024, UPI launched in France and suddenly you could pay at the Eiffel Tower with your Indian application. Within months,

Indian application. Within months, Indian tourist visits to France jumped 40%. NRIs in Singapore or France who

40%. NRIs in Singapore or France who used to struggle with money transfers could now send money home instantly through UBI Pay now integration. A

transaction that used to take 1 to 3 days and cost 3 to 5% in fees now happened in seconds at near zero cost.

Today, 1.5 million merchants across more than nine countries accept UPI. Indian

tourists can use UPI abroad. They spend

more. This drives tourism. This drives

spending. This drives economic ties and it projects power. So now countries everywhere are waking up to the fact that payment infrastructure is too important to leave in foreign hands.

[music] And that is why Brazil built Pix, Malaysia built do it now. Russia

has MIR, China has Union Pay and Alipe.

But India is the only one doing something different. The difference here

something different. The difference here is India isn't just putting UPI everywhere. It's actually helping other

everywhere. It's actually helping other countries as well to build their own system. [music]

system. [music] Peru, Namibia, Trinidad and Tobago all these are building payment networks based on UPI. Once ready they will

connect to India for crossber payments and this creates something new a network where every country has its own system but they all talk to each other. UPI is

a part of something bigger India's digital public infrastructure DPI. There

are three parts. Aadhaar for identity, UPI for payments, account aggregator for sharing data safely. Together they form the jam trinity. Jan Dhan bank accounts,

Aadhaar IDs, mobile phones. And here's

the best part. DPI is free. Any bank can use it. Any app can plug into it. NPCI

use it. Any app can plug into it. NPCI

doesn't charge anything. The goal is to make [music] India system the world standard. That is why other countries

standard. That is why other countries are now joining. The Bank for International Settlement started Project Nexus. [music]

Nexus. [music] It connects payment systems in India, Malaysia Philippines Singapore and Thailand. During India's G20 presidency,

Thailand. During India's G20 presidency, other nations adopted India's DPI model, and India now co-leads the G20 task force on digital public infrastructure.

This creates a very unique opportunity for India. Section 5, the future. The

for India. Section 5, the future. The

IMF recently said UBI transform digital payments in India. PayPal CEO said India is discussed everywhere he goes. India

processes 640 million UPI transaction every day. That's more than Visa

every day. That's more than Visa processes globally. 491 million people,

processes globally. 491 million people, 65 million merchants, 675 banks. This is

what India has built. In August 2025, Indians made 20 billion UBI transaction worth 24.85 lakh cr. By 2029, experts predict 6.4

lakh cr. By 2029, experts predict 6.4 trillion. by 2030 maybe 7 trillion. This

trillion. by 2030 maybe 7 trillion. This

is proof of concept on a very big scale.

It shows to the entire world that India is in a very unique position to create a new digital infrastructure that connects the world. Zerodha founder Nicl Kamat

the world. Zerodha founder Nicl Kamat called it soft power by design. But UPI

has one big problem.

Running UPI cost 500 cr every year.

Servers, security, fraud protection, customer support, all of this cost money, right? But merchants, they pay

money, right? But merchants, they pay nothing. Customers [music] pay nothing.

nothing. Customers [music] pay nothing.

Right now, the government is paying for everything. Visa and Mastercard say this

everything. Visa and Mastercard say this can't last. They say eventually the

can't last. They say eventually the system will fail. But what they don't realize is that UPI doesn't have to make money on its own. [music]

It just have to bring customers. And it

does. Millions of people open bank accounts just to use UPI. Then they take loans. They get credit cards, they

loans. They get credit cards, they invest, banks make money from all of that. But India is still looking for

that. But India is still looking for options. Maybe charge 0.2 to 0.3% on

options. Maybe charge 0.2 to 0.3% on large [music] purchases over 2,000 rupees. But India is still looking for

rupees. But India is still looking for options. Maybe charge 0.2 to 0.3% on

options. Maybe charge 0.2 to 0.3% on large purchases over 2,000 rupees. This

way, small shops stay free, regular people stay free. Only big companies like Amazon pay a tiny fee. Meanwhile,

credit on UPI already charges 1.2%. In

September 2025, NBCI raised the limit to 10 lakh for certain big transactions like investments and business payments.

Even a 0.3% fee on those kind of [music] transaction makes a lot of money without hurting normal people. Visa and

Mastercard can't compete. They can't

match for free. They can't match India's size. So for 60 years, the world was

size. So for 60 years, the world was dependent on two major companies. But

India made its own way and that is exactly what you should take home. We

didn't compete. We changed the game. We

built an entire digital ecosystem on a payment infrastructure. That is

payment infrastructure. That is leadership on a global scale. The

60-year monopoly is ending with one QR scan at a