New Delhi: The National Payments Corporation of India on Tuesday went live with UPI on credit cards by allowing credit cards from its local payment network Rupay to accept payments at crores of outlets that accept QR code payments . With the link of RuPay credit card on UPI payment platform, customers of Punjab National Bank, Union Bank of India and Indian Bank will be the first to use RuPay credit card on UPI with the BHIM app.Also Read – “All for Ease of Doing Business”: Sitharaman Says He Will Implement Common KYC for Financial Transactions
Until now, only debit cards were allowed to be linked to UPI. With the RuPay credit card link on UPI, customers will have an additional option to use their credit cards, and merchants will benefit from increased consumption by being part of the credit ecosystem with the acceptance of credit cards using assets like QR codes. Read also – Heritage On Money: Did you know these wonders on the back of Indian banknotes?
“Customers will benefit from the increased ability to use their credit cards, and merchants will benefit from increased consumption by being part of the credit ecosystem with the acceptance of credit cards using assets like codes QR,” the National Payments Corp Of India (NPCI) said in a statement. Also Read – RBI Ready to Tokenize Credit and Debit Cards From October 1st: Here’s Why You Should Tokenize Your Card | Explain
USING RUPAY CREDIT CARD ON UPI WITH BHIM APP
RuPay credit cards, which are primarily issued by public sector banks, will be linked to a virtual payment address via UPI ID, enabling instant scanning at merchant outlets that accept QR codes. Currently, RuPay credit cards hold a one-fifth market share in terms of spending in India.
Initiatives that were announced earlier by the RBI in previous monetary policy announcements include RuPay credit card on UPI, UPI LITE and Bharat BillPay cross-border bill payments.
UPI Lite will provide users with a convenient solution for faster and easier low-value transactions. At present, 50% of UPI payments are less than Rs 200. With UPI Lite enabled on the BHIM app, users will be able to perform small value transactions in near-offline mode by charging up to Rs 2,000 in their on-device wallets. Transactions up to Rs 200 can be done through UPI Lite.
IS THERE A HIGH MDR ON UPI-RUPAY CREDIT CARDS?
While UPI transactions via debit cards linked to RuPay incur no fees, the MDR (Merchant Discount Rate) – a fee charged to merchants for processing payments made via UPI, digital wallets, as well as debit cards debit and credit – has been capped at 0.9% for all other debit cards (Visa/Mastercard). On the other hand, the MDR for UPI transactions via credit cards has not yet been announced.
However, according to reports, it could attract 2% MDR (1.5% will go to the issuing bank, while the rest will be shared by RuPay and the acquiring entity).
For credit card issuers, MDR has been one of the main ways to make money, as credit cards typically have an MDR of 2-3%.
(With agency contributions)