The increased use of mobile phones and the growth of digitisation in India have led to more people adopting e-payment methods. The advent of the United Payments Interface (UPI) has further encouraged businesses and consumers to shift to e-payments. UPI allows users to merge multiple bank accounts into a single platform. UPI allows users to transfer money instantly so that amount is debited from the sender’s bank account and credited into the receiver’s account. While UPI initially facilitated the linking of debit cards only, in June 2022, the Reserve Bank of India (RBI) allowed credit card UPI payments by linking the credit card to payment platforms.
A glance at UPI
Launched in 2016, UPI enables people to transfer funds through affiliated apps such as Paytm. The intent is to create a cashless economy where maximum transitions occur electronically. Numbers show that in six years, users have grown comfortable with UPI.
According to data from the National Payments Corporation of India, the volume of transactions on UPI is only going from strength to strength. In September 2022, UPI processed 678 crore transactions, amounting to Rs 11.16 trillion. The numbers in August 2022, too, were equally encouraging. Amounting to Rs 10.73 trillion, UPI saw 657 crore transactions.
Compared to the previous year, UPI transactions saw a 68% increase in value and an 85% rise in volume.
What is the possible impact of credit card UPI payments?
While allowing credit cards to be linked to UPI, the RBI described UPI as the “most inclusive mode of payment” in India. As per the NPCI, this move will give customers more opportunities to use their credit cards. Meanwhile, the national body added that merchants and business owners who accept credit card UPI payments using QR codes can be an active part of the credit ecosystem.
The RBI began onboarding credit cards onto platforms with the RuPay credit cards. While there are no charges for debit card use on UPI, for credit cards, there will be no charge for transactions up to ₹2,000.
Now you can get your credit card with the Paytm SBI Card. Earn rewards on this credit card when you make payments via Paytm.
RBI guidelines for credit card
To make the onboarding process of credit cards on UPI platforms easier, the NPCI has issued guidelines. The national body also said these guidelines may be further improved based on market feedback.
As per the guidelines, customers can link credit cards to a Virtual Payment Address on a UPI-enabled app. The link will be facilitated through a registered mobile number.
Inward payments to the credit card-specific VPA from a savings/current account will be treated as credit card bill payment, NPCI said.
To enable easy payment of credit card dues, recurring transactions below Rs 15,000 will be processed without an Additional Factor of Authentication.
The RBI guidelines for credit card payment on UPI also specify that all credit card-related issues or disputes will be addressed by Online Dispute Resolution (UDIR). Only authorised credit card issuers are permitted on UPI platforms.
Now with the RBI having enabled the linking of credit cards to the UPI, it is likely that the path to a cashless society will be a shorter one. With credit cards joining the UPI ecosystem and digitisation rising across the country, cashless transactions will likely rule the payment ecosystem for the foreseeable future.