Linking Credit Cards with UPI to Get Higher Acceptance

The Reserve Bank of India said that it will allow the linking of credit cards with the UPI platform. The central bank said that only RuPay credit cards will be linked to the UPI platform in the initial phase. The move will enhance the credit card acceptance infrastructure as merchants can accept credit cards using UPI.

Industry players said that while the integration of Unified Payments Interface (UPI) with RuPay credit cards is seen as an advantage by key stakeholders, more clarity will be needed on some operational aspects.

While merchant discount rate (MDR) is levied by banks on merchants for card transactions at point-of-sale machines, MDR charges are waived off on UPI transactions. “Pricing is something that is not yet known. How the MDR will run, how they will be able to charge is not yet clear,” said Devang Neralla, CEO of payments aggregator NTT Data Payment Services India. But clarity from the regulator is very important for the entire payment system.

According to Asha Choksi, Assistant Vice President, Financial Sector Ratings, ICRA, the move could lead to a shift in credit cards, which, in turn, could lead to higher card usage levels and higher per card spends for banks operating higher shares. can increase. Rupay card.

However, as credit cards issued by RuPay are still gaining market share, the total credit outstanding against credit cards, which stood at around Rs 1.5 trillion as on April 22, is not likely to increase materially in the near term unless The enhancement in UPI linking is not extended. For other card platform operators as well,” he said.

A bank spokesperson said that since more clarity is needed on the subject, it is not possible to comment on the issue. E-mails sent to Bank of India did not elicit any response. “This is a welcome move, which will facilitate customers to avail the best of both payment and credit worlds. This is expected to increase spending in the economy and this fiscal economy,” said Shailendra Singh, MD & CEO, BOB Financial Solutions. This is a very far-reaching step towards improvement.

The move aims to provide additional convenience to users and widen the scope of digital payments reserve Bank of India Told. “UPI has proven its usefulness even before its widespread adoption, and bringing uniform convenience for access to credit could be a turning point for credit penetration in India. Today, UPI is practically ubiquitous, and I have no doubt that UPI-enabled credit cards will drive the next phase of credit-backed growth,” said Gaurav Chopra, CEO, online credit marketplace platform IndiaLends.

UPI transactions hit a record high in May as the platform doubled the transaction value to Rs 10 trillion during the month.