New Delhi: The National Payments Corporation of India on Tuesday went live with the UPI on credit cards by enabling its homegrown payment network Rupay’s credit cards for payment acceptance on crores of outlets accepting QR code payments. With the linkage 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 be able to use RuPay Credit Card on UPI with BHIM App.Also Read – Singapore, UAE To Accept India's Homegrown RuPay Payment Mechanism: Fin Min
Until now, only debit cards were allowed to be linked with UPI. With the linkage of RuPay Credit Card on UPI, customers will have an additional option to use their credit cards, and merchants will benefit from the increase in consumption by being part of the credit ecosystem with the acceptance of credit cards using assets like QR codes. Also Read – Digital Economy Gets Big Boost: RBI To Commence Pilot Launch of E-Rupee For Specific Use Cases Soon
“Customers will benefit from the increased opportunity to use their credit cards, and merchants will benefit from the increase in consumption by being part of the credit ecosystem with the acceptance of credit cards using assets like QR codes,” the National Payments Corp Of India (NPCI) said in a statement. Also Read – Maharashtra Announces Diwali Bonanza, Offers Grocery Package At Rs 100 To Ration Card Holders
USE OF RUPAY CREDIT CARD ON UPI WITH BHIM APP
RuPay credit cards, which are mostly issued by public sector banks, will be linked to a virtual payment address via UPI ID, allowing for instant scanning at merchant outlets that accept QR codes. Currently, RuPay credit cards have a market share of one-fifth in terms of spends in India.
The initiatives that were announced earlier by the RBI during 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 simpler low-value transactions. At present, 50 percent of UPI payments are below Rs 200. With UPI Lite enabled on BHIM App, users will be able to make small-value transactions in a near-offline mode by loading up to Rs 2,000 in their on-device wallets. Transactions up to Rs 200 can be made through UPI Lite.
WILL THERE BE HIGH MDR ON UPI-RUPAY CREDIT CARDS?
While UPI transactions via RuPay-linked debit cards attract zero fee, MDR (Merchant Discount Rate)—a fee charged to merchants for processing payments made through UPI, digital wallets, as well as debit and credit cards—was capped at 0.9% for all other debit cards (Visa/Mastercard). On the other hand, MDR for UPI transactions via credit cards is yet to be announced.
However, as per 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, the MDR has been one of the major ways to earn money as credit cards usually have 2-3% MDR.
(With inputs from agencies)