Home / Industry / Banking /  Customers of these 3 banks will be first to use RuPay credit cards on UPI

Reserve Bank of India (RBI) Governor Shaktikanta Das on Tuesday launched the Rupay credit card on Unified Payments Interface (UPI) network, a move that experts believe has the potential to expand the market for credit by almost five times.

Currently, UPI is linked through debit cards and bank accounts. Now, one can link their Rupay credit cards, too.

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 benefit.

“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.

‘UPI on credit card likely to be a game changer’

"UPI on credit card is likely to be a game changer as we will see an increase in the number of transactions on UPI with the payment instrument being credit cards. Initially, it will be allowed for RuPay credit cards only and going forward we expect that other scheme credit cards may also have this UPI linkage," said Mihir Gandhi, Payments Transformation Leader, PwC India.

Gandhi further said, "From a pricing perspective, we expect the pricing (MDR) for low value UPI on credit card transactions to be zero, however for higher value transactions it is expected that the MDR for UPI on credit cards will be similar to credit card swipe at online/physical locations."

“RuPay credit cards will be linked to a Virtual Payment Address (VPA) i.e. UPI ID, thus directly enabling safe, and secure payment transactions. The initial phase of operationalisation will be centred on extracting actionable learnings that would be used to fine-tune the proposition in later phases to scale up the usage," the NPCI said.

“Together, RuPay credit card on UPI, UPI LITE, and Bharat BillPay Cross-Border Bill Payments initiatives gives the potential to revolutionise the digital payments ecosystem and extend the reach of digital payments to many new users across India and abroad and aid the journey of onboarding the next 300 mn users on digital payments," it said.

Rising credit card and UPI payments

Experts and market players have said that rising credit card and UPI payments indicate towards increase in consumption amid recovery in economic activities with ebbing impact of Covid-19 pandemic.

There are 338 banks live on UPI platform as of July 2022. As per the RBI's monthly data, UPI transaction increased from 9.83 lakh crore in April this year to 10.73 lakh crore in August.

Similarly, credit card spends through PoS (Point of Sale) terminal increased from 29,988 crore in April this year to 32,383 crore in August. The credit card spending on e-commerce platforms, which was valued at 51,375 crore in April, rose to 55,264 crore in August.

An increase in volume and value of digital transactions bode well for the economy, believe market players. It also indicates that consumers are increasingly becoming familiar with different modes of digital payments, and giving up their inhibitions.


Meghna Sen
Business journalist tracking markets, companies and economy for Livemint. She has 6 years of experience with online and print publications. Email: meghnasen08@gmail.com
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