The Reserve Bank on Wednesday allowed credit cards to be linked with the unified payments interface (UPI), which will enable more people to make payments using the popular platform.
On June 8, the Reserve Bank of India (RBI) recommended linking credit cards to UPI networks. Governor Shaktikanta Das declared that the procedure would begin with RuPay credit cards, for the time being, other major credit card providers like Visa and Mastercard are expected to be gradually chipped in as well. Currently, UPI allows transactions by linking customers’ debit cards to their savings or current accounts.
In the ‘Statement on Developmental and Regulatory Policies’ released after the bi-monthly monetary policy meeting today, the central bank said, “In order to further deepen the reach and usage, it is proposed to allow linking of credit cards to UPI. To start with Rupay credit cards will be enabled with this facility.”
RBI expects that this arrangement will provide more avenues and convenience to the customers in making payments through the UPI platform.
“This facility would be available after the required system development is complete. Necessary instructions will be issued to NPCI separately,” the RBI statement said.
UPI transactions have made life simpler for buyers in India. While many customers hold multiple credit and debit cards, the process of paying with cards may be a little complicated. First of all, you need to carry the card physically with you at the time of purchase. Then, the card has to be swiped. Many a time, it also involves an OTP that comes to the buyer for confirmation.
UPI transactions are relatively easy and hassle-free. That is exactly why more and more people have started using it as it needs just a mobile phone, which most of the buyers carry with them anyway. As RBI Governor Shaktikanta Das noted, in May 2022 alone, 594.63 crore transactions amounting to ₹10.40 lakh crore were processed through UPI. So far, a major disadvantage of UPI transactions has been the inability to utilize credit cards for any transaction.
Ramesh Narasimhan, the CEO – of Worldline India, said, “UPI today is by far the most popular payment option for consumers online. In order to further deepen the reach and usage of UPI while keeping consumer preference at the epicenter, the RBI has offered an innovative solution to permit the linking of credit cards on to UPI platform. This will not only encourage consumers to continue making payments via UPI but also provide the benefit of short-term credit that credit cards extend.”
