Global players in card services like Visa Inc. and Mastercard Inc. are losing their market share to upstarts in India, as it becomes world’s most innovative payments market.

Homegrown ‘Unified Payments Interface’  have seen transactions going up and as per the reports by central bank data, it has reached almost half the value of debit and credit cards which were swiped at stores last month. The ‘interface’ allows mobile based run by retailers, airlines and many other firms to take payment directly from bank accounts.

There is a surge in UPI transactions since the year 2016 when the interface was set up for the first time by an umbrella organization of Indian banks. In a sharp contrast to that fact, it took Mastercard more than three decades to build up the business.

“The introduction of UPI in August 2016 led to the creation of a wealth of new innovative payment solutions, and the adoption rates of UPI payments are truly spectacular,” U.S.-based Fidelity National Information Services Inc. said in a December 2017 report. UPI “opens up access to real-time by allowing payments to be directly integrated into external business applications,” it said.

The Fidelity National, which tracked more than 40 countries to gain a top score of about five for innovation and customer value found the India’s payment system to be number one such system that offers such services. China’s Internet Banking Payment System scored two and Kenya’s PesaLink scored four. The criteria under which these were finalized included round-the-clock availability, speed of settlement, and level of government or regulator support.

Amazon.com Inc. and Jet Airways India Ltd. – considered the nation’s second-biggest airline by passengers — are among those firms that have integrated UPI into their apps in order to take payment from its registered customers. Ola, a local rival to Uber Technologies Inc., Big Bazaar, a chain of stores run by billionaire Kishore Biyani, and incumbent mobile wallet leader Paytm Mobile Solutions Pvt. are also among other users.

Facebook Inc., a communication platform, is piloting a payments service in India with a UPI backbone for its WhatsApp Pay, which has already drawn comparisons in the same way WeChat reshaped payments in China.

“Payment integration into popular apps in India will drive the digital payments market to $1 trillion over the next five years,” Credit Suisse Group AG said in a report last month. “With 800 million bank accounts now linked, the bulk is mobile-transaction ready.”

Currently, India’s payments market is considered worth less than USD 200 billion, dwarfed by China’s whopping $27 trillion market that’s now opening up itself to global players.

One challenge in India is the dominance of cash, which is still heavily used and accounts for some 70 percent of the country’s total transactions by value. However, China transitioned to digital on the back of rising mobile and data penetration, and that process was hastened by e-commerce and social platforms, according to the agency Credit Suisse. The same shift may play out in India too, where data usage for 300 million Indian smartphone users rose considerably to 5-10 GB a month from 1GB last year.

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