RuPay on UPI - What is the future of credit cards in UPI country?

The National Payments Corporation of India (NPCI) introduced a new feature linking Rupay Credit Cards to the UPI interface on 20th September 2022. Credit cards can be linked to Virtual Payment Address (VPA), commonly known as the UPI ID, which is generated in every UPI application. Such a method enables safe and secure payment transactions.

Till now, UPI apps have been developed in such a way that it integrated with debit cards only, but with the new scheme, RuPay credit card users will have the benefit of using their credit cards for scanning UPI QR Code and making UPI payments at merchant outlets. Accordingly, it will increase the base of retail consumers considering the massive outreach of UPI as a payment mechanism. Union Bank of India, Indian Bank and Punjab National Bank are the first to benefit their customers from the RuPay credit card scheme. Currently, the UPI integration of RuPay credit cards is available only on a few UPI apps.

Linking a RuPay credit card to the UPI platform takes a few minutes. Linking a RuPay credit card with the UPI is similar to how a user links a bank account/debit card to UPI. Firstly, the user must download their UPI app that supports RuPay credit card on their smartphone and then complete the registration process by entering the basic details like name and mobile number. The mobile number of the user must be linked to the credit card. In the UPI app, the user then needs to select the credit card option and the issuer bank name and update the credit card details like card number, expiry date, etc. The user will be asked to set a unique UPI PIN, which needs to be used every time during payment as part of authentication. This UPI PIN can be changed anytime by the user.

A RuPay credit card enables users to pay at retail shops, pharmacies etc., by scanning the QR code through the UPI app. It also allows users to pay at e-commerce websites, pay electricity bills, telephone bills, OTT subscriptions, and many more by selecting the RuPay credit card option at the time of payment. The users can enter the amount, select the masked credit card from the drop-down menu, and confirm the payment by entering their UPI PIN. Payment confirmation will be displayed once the payment is made.

RuPay credit cards are yet to gain popularity in the UPI integration because of the following reasons:-

●        Users cannot transfer money from their RuPay credit card to any other individual UPI ID.

●        Users with a RuPay credit card with UPI integration cannot make payments to any other credit card with UPI integration too. Therefore, users can't pay into someone else's credit card via UPI using their credit card.

●        RuPay credit card system also does not permit money transfers to small merchants having inward UPI remittances less than or equal to Rs 50,000 pm, like vegetable vendors etc. Only Payment to Merchant (P2M) will be allowed from the UPI-linked RuPay Credit Card.

Transaction through this process will follow UPI standard transaction limits. The transaction limit per card per day is Rs 1 lakh, and it can go up to Rs 2 lakh per transaction for verified merchants in specific categories. This limit is also subject to the credit card limit on the user's card. The RuPay credit card does not levy any charges on UPI transactions up to Rs 2,000. The Credit Card bill payment can be made from the linked savings account from the UPI App.

The NPCI offers a cashback programme on using RuPay credit cards to boost the number of transactions. To avail of the benefits under this offer, RuPay card holders must get their RuPay Credit cards linked to their UPI ID via UPI app. A sure maximum cashback is credited to the RuPay credit card account to each customer based on the amount spent on each transaction.

Overall, considering the benefits and setbacks of the newly introduced UPI-enabled-RuPay credit card scheme brings more coverage to the UPI market. There will also be an increase in the number of daily transactions from the customer's end as more products are coming under the credit line, which was not available earlier. On the other side, this scheme will help merchants with increased revenue. Cashfree’s  UPI QR Code generator helps merchants to generate unique printable QR codes for each branch or franchisee, collect UPI payments via any UPI app and match all payments with their business entity. RuPay cards are gaining more popularity than other cards like Visa or Mastercard. The increase in its usage will reduce the pressure on the traditional banking system, further improving the success rate of digital transactions, enhancing the user experience, and taking us one step closer to processing a billion transactions daily on the UPI platform. Other banks like SBI, ICICI Bank and Axis Bank are also expected to introduce UPI-enabled-RuPay credit cards for their customers. Looking into the progress made by the UPI technology, all the banks will one day have their UPI-enabled credit cards.

(Above mentioned article is a consumer connect initiative. This article is a paid publication and does not have journalistic/editorial involvement of IDPL, and IDPL claims no responsibility whatsoever)