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Know these rules and who can use of Credit card linking with UPI

Reserve Bank of India (RBI) on June 8th, 2022 has allowed 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, announced on June 8. The aim is to provide more convenience to the customers and enhance the scope of digital payments, Das added.

At present, consumers can use their savings accounts, current accounts and debit card to facilitate UPI transactions. With 26 crore users, UPI has emerged as one of the most popular payment systems in the recent times. Last month, a total of 594.63 crore transactions amounting to Rs 10.40 lakh crore were processed through UPI. To continue this momentum, RBI has decided to include credit card option in UPI, believe experts.

How UPI-Credit Card Linking Will Benefit the Users

Initially, UPI payments could be done only via bank accounts. Later, the UPI applications have started 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 others. Once the credit cards are linked, users need to scan the QR code and choose credit card as the payment mode. Using credit limit for UPI transactions has been limited to very few applications and banks. With the latest announcement, RBI has opened the UPI through credit facility to all the players.

“Being one of the convenient and hassle-free modes, UPI has become the most popular payment method. Now, with the new change, customers would get more options as well as convenience in making payment for various small and large bills," said Pranjal Kamra, chief executive officer, Finology Ventures.

Can you Use your Credit Card for UPI Transactions?

At first, only the RuPay credit card users, will be able to link their cards to UPI platforms. It must be noted that both the RuPay network and UPI are managed by the National Payments Corporation of India (NPCI). “This facility would be available after the required system development is complete. Necessary instructions will be issued to NPCI separately," the central bank said in a statement.

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?

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 used to pay at the ubiquitous QR codes, and the need for the expensive POS machines will not be there anymore," said Ankit Gera, Co-founder, Junio.

UPI Payment via Credit Card Charges:

The central bank has not announced 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 been capped 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, Gera added.



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