UPI via Credit Cards 💳

RBI proposed to link credit cards to UPI platforms, beginning with Rupay cards, as another method to control inflation.

Currently, UPI is offered on Debit or prepaid cards only.

For customers like us, this step will make payments even more convenient through UPI_NPCI . People will now be able to pay with a credit card at even a small chai shop or the fruit vendor.

https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=53831

Benefits : 🏆

1. Faster payments — no need to enter the card number, CVV, etc every time on the payment gateway.
2. Faster checkout — Scan & pay at shops instead of carrying and swiping CC.
3. Faster refunds (maybe?) — no longer need to wait up to 10 business days to get a CC refund.

When you pay through UPI with credit cards, you will get credit card benefits like free credit for up to 50 days, reward points, contribution towards achieving milestones, etc but People might overspend since it is coming from credit card through UPI.

After linking, Maybe for credit card payments, you don’t need to enter 16 digits, expiry year & month and CVV. Just enter mobile no, choose credit card vendor and then complete the transaction with UPI PIN/OTP.

Issues : 🔬

If payment becomes so this easy then the expense of people will rise… Which will affect people’s wealthiness, no ??..

Of course, it helps the country’s GDP to grow BUT it will affect its people badly in terms of savings.

That’s actually concerning, the ease of accessibility is putting a hole in the pocket.

This will do more harm than any good, some of the things I can think of,

1- Irresponsible use of CC( Overspending)

2- Increase in liquidity, people might use the credit line on CC for investments in stock markets( End up losing money in the majority of cases)

Control measures : 🛠

1. Provide max 50% of the credit card limit in UPI transaction
2. Allow a transaction only if the CIBIL score is 760+.
3. Payment of the card bill is to be done within 20 days since banks provide 30+ days to pay it.
4. One can’t pay through another credit card if he/she exhausted 1/2 credit card.

So what? 🧐

The herculean task here is the requirement of merchants to be onboarded again for UPI + Credit rails.

UPI already makes India the largest real-time payments market in the world, Linking credits cards would solidify that position.

I wonder what would happen to the merchant fees though, They’re accepting UPI since they don’t have to pay commission to the banks+VISA+MASTER+AMEX.

Razorpay's founder Shashank Kumar is already optimistic about this.