UPI Just Beat Visa And Mastercard Combined. Now Berkshire Has Sold Both....

Ajouté : 2026-05-31

[00:00:02]One quick note before we start. Some of you have been writing in saying that you prefer this in Tamil or Hindi. The video is available in multiple languages. The audio track is for you to choose. Tap on the gear icon on your YouTube player.

[00:00:15]Choose the audio track and listen to the language. Same content, your voice of choice. Of course, it's AI generated. It is not me who has done multiple tracks.

[00:00:23]I do not know those languages. Good evening tribe. Standard SE reminder. I'm not a SE registered investment advisor.

[00:00:29]Nothing in this video is about buying or selling anything. It's only structural analysis for your own thinking. I know it gets repetitive, but I need to get it out there every single time. One quick note before we start. This video is available in Tamil Hindi audio tracks.

[00:00:44]You can type on the gear and YouTube player and switch over. Keep in mind it does take some time for YouTube to do the translation. It's not available as soon as the video is up. So, patience.

[00:00:55]Tonight, we're going to talk about something. I thought I should have addressed in the last video about inevitables and I want to thank our tribe member Mr. Ajenta Karthik 4977 who flagged it in the comments when I called Visa as inevitable. most relevant recent facts about Burkshire Hathways under Greg April was brought to my notice and they had exited their entire visa masterard positions in quarter 1 of 26 13F filed on May 15th that was public knowledge for 10 days before I recorded and I missed it. I admit that the video framework still passes visa but I owe you the deeper question that exit raises which is this. If the firm Buffett built no longer holds the most dominant payment network in the world, what does that tell us about what is coming next?

[00:01:49]And I think that should be something we should focus on. The honest answer brings us to UPI, Indian payment system that has in 2026 started processing more daily transactions in Visa and Mastercard combined globally. That is not a typo. So tonight we are going to ask the most important question for anyone holding payment infrastructure.

[00:02:11]So sit tight in is UPI a uniquely Indian story is the most important thing or is it the beginning of the end of the card network monopoly? I know don't I know it's controversial but hang in there.

[00:02:23]Let me start with numbers first because they are genuinely shocking for most of you who use UPI probably 20 times a day and are not even absorbed how big this has become. In April 2026, UBI processed 22.35 billion transactions worth 29 lakh cr rupees in a single month. That's roughly 348 billion in transaction value in one country in one month. Daily averaged 745 million transactions for the full year financial year 26. UPI's processed 241 million transactions worth 314 lakh cr rupees. Transaction volume grew by 25% yearonear. The success rate is 99.2%.

[00:03:06]User base is over 400 million Indians.

[00:03:09]That's more than US's Visa Mastercard combined in a single country outside US.

[00:03:14]Sorry, not US, outside US. And here is the structural point that matters for bankto bank UPI transaction which are the bulk of the volume the merchant discount rate is almost zero or zero. Since January 2020 the government has held this policy and as recently as June 2025 the finance minister explicitly ruled out any plan to introduce MDR on UPI. I want to be precise here because I have seen lazy versions of this claim made in other channels and probably by me in the past which has not been quite right. Up is not free everywhere in every ecosystem.

[00:03:54]Wallet payments through a prepaid instrument like PTM wallet or transactions over 2,000 rupees do carry an inter exchange fee typically 1.1% pay to the merchant. lower for categories like fuel and ru pay credit cards using up UPI carry the full MDR like normal credit cards do there's a small fixed fees on peer-to-peer transactions in the range of.3 to 4 basis points and that is shared between bank apps so UPI is literally non zero but in every flow we can talk about it right the dominant flow bankto bank account through UPI apps like Phone pay, Google pay carries zero MDR for merchant and zero charges for consumer. This is a structural threat for the card networks. Visa, Mastercard's basic business model is taking 1 to 3% on every transaction in their network. That's equivalent to UPI flow taking zero. Even if the card networks are subsidized reward programs and credit underwriting is at that 1 to 3% the cost differential against a free alternative is enormous and it is what has been driving the adoption of UPI.

[00:05:15]Let me put up against global card network numbers first because the comparison in the story's full fiscal year 2025 payment volume was $14.2 trillion. That is bigger than UPI by a multiple but it crosses 200 plus countries over a year. UPI does 348 billion in a month in one country and is growing 25% yearon year while visa is growing payment volumes is around 8 to 9%. The growth trajectory will cross at some point in the next decade if current rates hold. The most important comparison this one silicon canals reported in March is that UPI now processes more daily transactions than Visa and Master Card combined globally.

[00:06:06]volume not value. Card networks still win on dollar value because each card transaction tends to be larger than the UPI transactions. 86% of which come under 500 rupees but not a transaction count basis but on a transaction count basis the Indian payment system has already overtaken global deploy right so how did this happen and is it replicable is what the important question is this is filter 4 on the card network at a structural level three things made UPI work each one of them is now being studied by every central bank in the world one UPI I is a governmentbuilt infrastructure where the basic bank-to-bank flow carries zero merchant discount rate by policy. The cost of running the rails is boned by the National Payment Corporation of India NBC which is owned by Indian banks and RBI with a government subsidy that has been placed since the zero MDR policy was introduced. This is not a profit maximizing private monopoly in the middle taking a cut on dominant transaction flow. Two, UPI is interoperable. Any UPI app works with any UPI bank which means the network effect that the Visa Machard spent 60 years building was given for free to every new payment app on day one. Phone Pay and Google Pay did not have to build their own merchant networks. They just plugged into UPIs. Three, the most important smartphone and other identity layer made onboarding nearly costless.

[00:07:46]Opening a new pay account takes 5 minutes versus weeks it takes to get a credit card. The combination of a zero MDR banktobank rails, full interoperability and digital on boarding produced a payment network that beats the card networks on every dimension except one which is credit. UPI is fundamentally a debit style system. Card networks still own the credit card market and that is where the highest margin transactions live. Why? Because it's credit money. We will come back to this in a bit. Now the question for global investors is this uniquely an Indian story or is this starting to get exported? The answer is it is being exported faster than most observers realize. UPI is now live in eight countries. UAE, Singapore, Bhutan, Nepal, Sri Lanka, France, Marushia's Qatar. NCPI international which is a subsidiary set up specifically to export UPI globally has a memorandum of understanding with 23 countries for cooperation on Indian stack and digital public infrastructure. The target is 20 new countries by 2027 including Indonesia, Vietnam, Oman, and the UK.

[00:09:05]Crossber UPI transactions grew 20 times in a single year. In Singapore, the UPI pay now linkage allows instant realtime crossber remittance. In France, UPI works through the Lyra payment network.

[00:09:20]Over 1.5 million international merchants, Sri Lanka launched Sri Lanka QR UPI integration in March 26. The Indian government is treating UPI as a digital diplomacy tool. The same way the United States treats the dollar payment system after World War II, every country that adopts UPI is a country whose retail payment volumes permanently moves out of the Visa Master pipeline.

[00:09:48]Give you a moment. But before we you write off the card networks completely, let me put the bare case in honors perspective because this is where most YouTube commentators on YouTube story I think get sloppy. The card networks have three structural defenses that UPI does not yet threaten. First, crossber payments are of high value. A $50,000 international wire is not going to move through a UPI in the foreseeable future.

[00:10:16]Compliance and the FX layer is high value cross borders are still card and swift territory. Second, credit card UPI is a debit system. The card network owns a credit card market which carries higher transaction fees. Longer relationship economics rupee credit cards are growing but slowly and the most premium credit cards products globally are still on Visa Mastercard rails. Third value added services. Visa is now generating 50% of its revenue growth from value added services like fraud detection, tokenization, and now the world of AI AI agent payment infrastructure and stable coin settlement. Visa already runs $4.6 billion in annualized pay stable coin settlement volumes. They are pivoting from being a payment network to becoming a payment infrastructure stack. That is not a business UPI threatens. UPI threatens the basic transaction process business processing business is what is threatening and the lowest margin part of the card network revenue the lowest bond. This brings us back to the inevitable question. Is Visa still an inevitable? The framework answer for most last week was yes with the AI caveat. The deeper answer now is yes for the next 5 to 10 years. But the dominant business model will look different than the one we are looking at than the one Buffett bought into 2020 sorry 2011. The car network is not being replaced. It is being structurally transformed. Gable's exit on Bshshireway is not a call that Visa is going to fail. It is a call that Visa is no longer a simple toll booth that Buffett bought. And at 28 times earnings with this much business model and certainty the position is not compensated.

[00:12:09]different question from whether the company survives. Survivable is very much highly likely. Compounding at historical rate is the big question.

[00:12:18]That was what I want you to think about.

[00:12:19]Now the question that matters most for Indian retail investors. How do you invest in UPI thesis? Here is where the honest answer is uncomfortable. UPI is government infrastructure.

[00:12:32]You cannot buy NPCI directly. The closest listing place are private UPI app operators. But phone pay is unlisted and I don't know and Google pay is part of the alphabet which derives most almost no revenue from UPI they want data and that's what they harvesting.

[00:12:49]PTM is the only listed pure play and has its own governance issue earnings challenges which my brother has spoken a lot about. Infrastructure that makes UPI possible is not really investable in the way Visa is investable. This is a paradox of a public digital infrastructure. It creates enormous economic value while being structurally difficult to capture as a shareholder.

[00:13:10]That's what we are here talking about.

[00:13:12]Indian government built the UPI specifically to dis intermediate the private payment monopoly and designed works exactly as intended. The closest analogy is asking how to invest in the internet. In 1996, the infrastructure layer was largely uninvestable. The application layer is where the value was accured. Maybe UPI does that. So the framework conclusion is this. UPI is the most important structural development in global payments in I would say 30 years. It does not give retail investors a clean way to participate directly. It's okay.

[00:13:53]It doesn't give global investors holding Visa, Mastercard, American Express and PayPal a structural risk that is genuinely underappreciated at current valuations and it gives Indian investors a reason I would say to pay close attention to credit card growth story specifically because that is the part of the card network business model the UPI has not yet attacked. So if UBI starts making dent in credit card then we have a different conversations. I want to preempt the obvious objections before I put it into you guys put it into comments. You will say the UPI's bankto bank rails do not make money. The card networks do so. How can you say zero MDR alternative be a threat to a profitable network? The answer is that the basic UPI rails were never designed to make money. They were designed to break the monopoly rent that card networks were extracting from Indian economy. So did it do that? I would say it succeeded there. The Indian government calculated that 1 to 3% of every retail transaction in India flowing through two American companies was attacks on Indian commerce that could have been eliminated by building a public infrastructure.

[00:15:09]They were right. The same calculations now being run in every emerging markets central bank. Brazil's PIX is a UPI cluent. European Central Bank is building one. Even the Chinese WeChat pay, Alip Pay are structurally similar to this. The card networks are not losing the business they have. They're losing the business they would have grown into if they had thought of it differently. Now coming back to the tiff and coffee, what does this mean for us?

[00:15:39]The discipline is staggered accumulation in businesses we understand that have a durable competitive advantage. UPI is forcing us to ask hard questions about durable. What does it mean? What does it mean to payment infrastructure?

[00:15:54]The card network remains great business today. The question is whether their compounding rate over the next 30 year matches the last 30. Berkshire's exit suggests the answer at current prices is a no. The framework answer is more nuanced than that. Filter 4 has weakened structurally even if the mode is still intact today. Different names for different conviction levels. I guess if you agree. So what is your homework?

[00:16:24]Your homework is open your UPI app right now and look at how many transactions you have done in the last 30 days. Count them. Now ask yourself, how many of those transactions would you have done on a credit or a debit card if UPI did not exist? Drop the number in the comments. I'm willing to bet the average tribe member has done over 50 UPI transactions in the last month alone or at least 30 of them would have been on car transactions in 2018.

[00:16:59]Multiply that by 400 million Indians and you will start understanding why Greg Gable sold Visa say disclaimer again which I said in the beginning now at the end there's not a buy or a sell these companies which I've mentioned are for factual references to listed entities they're not recommendations from me apply your own judgment to your own work please and definitely get a financial advisor watch the facts not the statements and do keep those comments coming I'm really enjoying enjoying this interactive conversations we're having. It is much better than me having a monologue to a camera all by myself. Thanks for being with me on I hope you enjoy this video. If you do think someone should be part of our tribe or become a member, do share this video with them. Turn on these bell notifications and all these other icons. If it's something you think deserves it so you get notified every time me and the tribe member come to talk to you and knocking on your door.

[00:17:55]Nothing else more to say. Have a good one. Bye.