The major difference between UPI payments and Credit Cards is that there is no 'surcharge'. This is what makes it very viable for small merchants to accept payments of minimal amounts.
https://scroll.in/article/1045536/are-your-upi-payments-farm...
(note: these paragraphs are not juxtaposed)
> “All these parties get a slice of the transaction data,” Lakhsmanan said. “This is built into the UPI system, which works on the model of ‘data maximisation’ – collecting and sharing as much data as possible.”
> The amount of data shared on the digital spending habits of consumers is significantly more in UPI as compared to traditional forms of digital transactions. “In a card payment system, such as credit cards, there are fewer parties,” Lakshmanan explained. “Further, the data stored is not identifiable, since it stores credit card numbers, that too in a redacted fashion.”
> But since this is not happening, companies may have to resort to other ways to make money. Said Jonnalagadda, “The lack of merchant discount rate [charges for processing debit and credit card payments] is a disincentive to all middle parties in the transaction – banks and apps, so they are forced to cope by upselling other services or collecting data and looking for data monetisation opportunities.”
> I suspect at some future point UPI (non-wallet) transactions will be charged a small fee and wallet transactions will not.
Right now, it is other way round. Wallet transactions above ₹2000 attract some fees for merchants.