Soon you will be able to make UPI (Unique Payments Interface) payments using your credit cards. The Reserve Bank of India has proposed linking credit cards with UPI for payments. Initially, this facility will be available for Rupay Credit Card users only. The entire framework for the credit card linking to UPI is still awaited from the RBI.
Once implemented, as a user, you will be able to link UPI with credit card details in addition to bank account or debit card details used currently. “Users would be able to add their credit card accounts to the UPI app and set up the same security protocols. At the time of payment, they would be able to select which account they would like to pay from (debit or credit). However, this is not confirmed until RBI and NPCI (National Payments Corporation of India) set out the framework,” says Rajith Shaji, CEO & Co-Founder, Volopay.
Credit card linkage with UPI will mean you will not be required to hand over the plastic card to the merchant to be used on the swipe machine. However, that may not make the swipe machine obsolete anytime soon. “It is highly unlikely that card swipe machines would become obsolete. Even today, debit card users swipe their cards in areas with low data connectivity. Moreover, even if the internet infrastructure becomes impenetrable, unless UPI allows the addition of every credit and debit service provider (Visa, Mastercard, American Express, etc) those credit cards would still be getting swiped/tapped,” adds Shaji.
Presently, Credit card transactions are allowed to be converted to EMI option or no-cost EMI option, etc. Once the credit card option to pay through Upi becomes reality, how will they be conducted?
“The RBI and NPCI have yet to share the framework on how exactly the credit card linking will work, and how this would affect the EMI and no-cost EMI schemes. It might be that the generated QR code for the payment would include the EMI/interest information on payment machines or UPI portals that generate unique QR codes for each transaction. Until the RBI and NPCI confirm how this will happen, there is no way to accurately predict how the EMI/ no-cost EMI options will be incorporated,” says Shaji.
The levy of MDR (Merchant Discount Rate) remains a crucial issue in the process of credit card linking with UPI. Shaji says – MDR is generally not charged when debit cards are swiped via UPI apps, however, it is currently unclear if this will be the case with credit card users. The RBI has not yet released information on this, and it is highly anticipated by merchants and users alike. That being said, since the credit card link to UPI is only for RuPay (as of now), the MDR charges are still expected to be lower than Visa or Mastercard (if any at all).