Reserve Bank of India (RBI) has allow users to link their credit cards to Unified Payments Interface (UPI) platforms.
The central bank will begin this facility with the indigenous RuPay credit card, Shaktikanta Das, governor of RBI, announce on 8th June 2022.
The main aim is to provide more convenience to the customers and enhance the scope of digital payments, Shaktikanta Das said.
Consumers can use their savings accounts, current accounts and debit card to facilitate UPI transactions.
With 26 crore users, UPI has emerge as one of the most popular payment systems in the recent times.
In May, a total of 594.63 crore transactions amounting to Rs 10.40 lakh crore were processed through UPI.
To continue this momentum, RBI has decide to include credit card option in UPI, as per experts.
RBI Allows Linking Credit Cards With UPI for Easy Transaction, to Start With RuPay
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How UPI-Credit Card Linking Will Benefit the Users?
UPI payments could be done only via bank accounts.
Later, the UPI applications have start allowing users to add debit cards to make payments.
From now on, the users can also link their credit cards to popular UPI applications such as Google Pay, Paytm, PhonePe and many others.
When the credit cards are link, users need to scan the QR code and choose credit card as the payment mode.
Using credit limit for UPI transactions has limit to very few applications and banks.
With the latest announcement, RBI has open the UPI through credit facility to all the players.
Can Credit Card Use for UPI Transactions?
At first, only the RuPay credit card users, will be able to link their cards to UPI platforms.
It must be note that both the RuPay network and UPI are manage by the National Payments Corporation of India (NPCI).
Central Bank Said in a Statement :
“This facility would be available after the required system development is complete. Necessary instructions will be issued to NPCI separately,”.
Individuals with other credit cards such as Visa or MasterCard, will have to wait a little longer to use this new facility.
How will UPI-Credit Card Linking Benefit the Merchants?
As per experts believe that the linkage of UPI and credit cards will also be extremely beneficial for small merchants.
Along with being an extremely consumer friendly development, this will also benefit the small merchants as well as the largest UPI acquirers such as PhonePe, Paytm, BharatPe etc.
Cards can now effectively be use to pay at the ubiquitous QR codes, and the need for the expensive POS machines will not be there anymore.
Charges of UPI Payment via Credit Card
The central bank has not announce any charges yet for using credit cards for UPI payments.
Banks or lenders could charge a nominal fee for linking credit cards to UPI platforms.
Merchant Discount Rate or MDR has cap at zero for payments through UPI.
Merchant Discount Rate is a fee that bank charges on a merchant for accepting payments from their customers via credit and debit cards.
It will be interesting to what charges a merchant has to for using credit cards via UPI.
