Fintech apps now support RuPay credit card payments via UPI
Fintech apps like MobiKwik and Paytm now allow users to link their RuPay credit cards with UPI (Unified Payments Interface) for all merchant payments.
Fintech apps like MobiKwik and Paytm now allow users to link their RuPay credit cards with UPI (Unified Payments Interface) for all merchant payments.
To deepen the use of digital payments via UPI, the Reserve Bank of India in June 2022 allowed linking of credit cards to the UPI platform. Those in the industry opined that this move by the RBI is expected to significantly expand the scope of UPI payments.
To deepen the use of digital payments via UPI, the Reserve Bank of India in June 2022 allowed linking of credit cards to the UPI platform. Those in the industry opined that this move by the RBI is expected to significantly expand the scope of UPI payments.
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A few fintech platforms in partnership with the National Payments Corporation of India (NPCI) have recently started offering this feature. Initially, only Rupay credit cards have been enabled for payments.
To activate, users need to link their RuPay credit card with their UPI ID. After that, one can choose to make the payment using the credit card by scanning the UPI-enabled QR codes after authorizing the transaction with the PIN code. Note that both offline and online payments can be made using this feature.
UPI transactions are divided into two categories – person-to-merchant (P2M) and peer-to-peer (P2P). As the names suggest, the former includes money transfers between people and merchants (payments), while the latter deals with money transfers between people.
Since credit card payments are meant to be used only for payments to merchants and not for money transfer between two people, credit card payment via UPI is also enabled only for P2M payments. According to experts, merchant UPI IDs are different from personal UPI IDs, so it is not difficult to distinguish between P2P payments and P2M payments.
Users will not be charged any fee for their credit card transactions via UPI.
However, merchants are charged the MDR (merchant discount rate) fees by their banks for accepting credit card payments. “Online and offline merchants will have to pay the standard credit card MDR, which is approximately 1.7% for all transactions. However, offline merchants are exempt from the MDR for transactions below ₹2000,” said Upasana Taku, Co-Founder and CEO, MobiKwik.
On the other hand, current UPI payments backed by a bank account are currently exempt from MDR charges.
We will have to wait and see if merchants will discourage consumers from making credit card payments via UPI due to the MDR levy. “Merchants will be at a disadvantage if they refuse such payments, as credit card purchases are usually of higher value than other payments,” said one industry expert, who did not want to be quoted.
Surinder Chawla, MD and CEO, Paytm Payments Bank said, “we believe this facility will make payments easier while also leading to greater penetration of the credit ecosystem in India.”
Nevertheless, a user must be careful and restrain himself from overusing the leverage offered by credit cards.
