India's financial technology landscape is witnessing significant developments with the National Payments Corporation of India (NPCI) making strategic moves to strengthen its position in the digital payments ecosystem. Simultaneously, there are shifts occurring in the venture capital space, with Y Combinator (YC) seemingly reducing its focus on Indian startups.
NPCI is actively promoting its RuPay credit cards to challenge the dominance of Visa and Mastercard. The corporation has begun offering financial incentives to banks to encourage them to issue RuPay cards to their customers. This initiative is not solely reliant on governmental support but also presents a strong business case for banks to collaborate with NPCI's credit card network. Several major consumer brands, including PhonePe, Flipkart-backed Super.Money, and Tata Neu, have launched co-branded RuPay-powered credit cards in the last couple of years, specifically targeting UPI-linked spending.
The efforts to popularize RuPay credit cards are crucial for NPCI, given that its other major products, RuPay debit cards and UPI, do not directly generate revenue for banks. While NPCI doesn't publicly disclose transaction data for RuPay credit cards, industry estimates suggest that annual settlements through the network are around ₹20,000 crore, which accounts for approximately 10% of overall credit card spending. Fintech startup Kiwi, which issues RuPay-powered credit cards in partnership with various banks, reports that RuPay's credit card market share in terms of card issuance grew from 3% in 2023 to 12% in 2024. SBI Card, a major credit card issuer in India, has reported consistent growth in UPI payments via RuPay credit cards. Average monthly UPI expenses per customer on these cards have risen to ₹18,000 in tier-two cities and beyond, compared to ₹11,000 in April 2024. In tier-one cities, spending has increased to ₹14,800.
NPCI is also making updates to its RuPay Debit Select Card, which will be effective from April 1, 2025. These updates aim to cater to modern lifestyle needs, including fitness, wellness, travel, and entertainment. New features include complimentary domestic and international lounge visits, personal accident insurance coverage, complimentary gym memberships, free health check-up packages, golf lessons, spa sessions, and subscriptions to streaming services like Amazon Prime, Hotstar, and Sony Liv.
While NPCI is making strides in the digital payment sector, Y Combinator (YC) appears to be shifting its focus away from India. Several factors may be contributing to this change. Institutional investors have seen substantial cash returns on their investments in Indian startups and VC funds, leading them to invest in other funds and boosting the availability of domestic capital. Favorable regulatory changes, such as the abolition of the 'angel tax', have also facilitated the growth of domestic capital. The emergence of AI is another factor, YC's spring 2025 batch featured 70 startups focused on agentic AI. However, some believe that American companies are ahead of Indian companies in the adoption and curation of AI models. As a result, India-focused accelerator programs such as Peak XV's Surge are increasingly prioritizing AI-first startups.
