Well, Card Network (Visa, MasterCard, RuPay) is one Payment Rail, UPI is another and competing Payment Rail.

(Actually UPI is a frontend over the IMPS Payment Rail but I’ll ignore that detail since it’s not relevant in the context of this answer).

Since competitors compete, UPI does not support Credit Card.

That’d be my “going-in” answer to your question.

However, competitors do partner together, at certain times. It’s called coopetition. So life is not so simple in real life.

I had a taste of both competition and coopetition in my first job. I began my career in a Midsized Engineering Company (MEC). There was a 800 pound chimpanzee in my industry. Let me call it Giant Engineering Company (GEC). GEC was many times larger than MEC. We’d compete tooth-and-nail with GEC on most deals, win some, lose many.

However, there were certain times when giant prospects would have giant requirements for multiple products and would want to entrust the entire project to a single Vendor. Giant as it was, GEC didn’t have a couple of products that MEC did. To meet the prospect’s expectation for a single vendor, GEC would partner with MEC on certain deals. I still remember an instance in the mid-1980s when I made three sales calls on the same day. We competed with GEC on the first and third calls. We partnered with GEC on the second deal in between. It was quite surreal, working as rivals for most of the day and as best friends for part of the day. I guess, all in a day’s work.

While competition is still rampant, there are increasing cases of coopetition. Some of them begin as hardcore competition at first and then take on flavors of coopetition while still maintaining the intrinsically competitive nature of the relationship.

One of the best examples I can cite for the morphing in business relationships is the rideshare industry.

Uber started out with Car Taxis. So it competed with Yellow Top Taxis (where available i.e. Bombay, Delhi, Calcutta) and with Autos everywhere. There were many instances when Yellow Top Taxi and Auto Drivers would pelt Uber Cabs with stones and not let them ply at high traffic areas like Railway Stations. All that is now history. Today, Uber allows riders to book Yellow Top Taxis and Autos on a single app, along with its own range of Uber Cabs like uberGO. There are actually dedicated ranks for Uber (and competitor Ola) in Railway Stations.

Now, coming back to UPI and Credit Cards.

India has a population of 1.2B people. But banks have found only 50M people credit-worthy enough to issue Credit Cards.

So there was a huge population of people who had no digital payment service. (While NEFT and IMPS have been around for nearly a decade, they were not really purpose-built for instore payments, which forms the majority of retail payments). Enter UPI. By providing a new frontend over the old IMPS Payment Rail, UPI enabled anyone with a smartphone and bank account to make digital payments instore (and online) in a frictionless manner.

Credit Card owerns are well served by Card Network Rail. Those who don’t have Credit Card are served by UPI Rail. Each to his one way. As things stand, there’s not much compelling need for coopetition between UPI and Credit Card. So they remain competitors and UPI does not accept Credit Card and Credit Card does not accept UPI.

That said, Payment Rail is mostly a backend thing.

On the frontend, where Merchants accept digital payments, UPI created the need for the Merchant to have a UPI QR Code to be able to accept UPI payments. This was in addition to the POS terminal they already had for accepting Credit Card and Debit Card. This caused a certain degree of pain for high-volume and CX-conscious Merchants on account of extra space requirements and the need to divert customers to the appropriate acceptance infrastructure. This created the compelling need to merge the two acceptance infrastructures i.e. have coopetition between Credit Card acceptance infra and UPI acceptance infra. This coopetition has already begun. I have seen some Fintechs and Banks offering a single POS terminal that accepts both Credit Card and Debit Card payments (via standard DIP and TAP modes) and UPI payments (via display of the Merchant’s UPI QR Code on the terminal’s screen).

So, while it’s true that Credit Card is not included as a part of UPI payment method, it’s also a fact that UPI acceptance infrastructure can be included as a part of Credit Card acceptance infrastructure.

Who knows, someday, there may be a strong case for coopetition between Credit Card and UPI at the backend rail level, and, at some point in the future, UPI and Credit Card may become fully interchangeable payment methods.

PS: More details on the concept of Payment Rail can be found at Ketharaman Swaminathan’s answer to Why does Paytm not give an option to pay via wallet (allows only UPI) at some merchants?.