The Reserve Bank of India (RBI) on June 8 proposed linking Rupay credit cards (issued by the National Payments Corporation of India or NPCI ) to the Unified Payments Interface (UPI) platform. According to experts, linking credit cards to UPI is a game-changing move by the RBI that could increase credit card penetration and expand the scope of digital payments in India.
Millions of people in India now use UPI apps for making payments and doing transactions online. The UPI has found wide acceptance among merchants and customers because it is a convenient mode of payment. In this context, it is important to understand how a credit card is linked to UPI.
How Credit Card Is Linked To The UPI Apps
At present, only RuPay credit cards from Indian Bank, Union Bank, and Punjab National Bank can be linked to UPI. To link your card, log in to your UPI app and go to the bank accounts section. Now go to the ‘Add Account’ section, select credit card, and then select the issuing bank. After this, your credit cards with the selected issuer will be displayed. Select the card and confirm. Next, you need to set up a UPI PIN for the same. Once done, your card will be added, and you can start using it to make UPI payments. Note that this is a general procedure; the actual process may vary slightly across different UPI apps.
Benefits
UPI offers the convenience of making payments using our mobile phones. However, as only savings or current accounts could be linked to UPI to make real-time bank transfers, consumers had limited ways to pay for a transaction. Moreover, while many users already own credit cards, making payments via cards requires them to carry the card everywhere, dip/swipe in the POS machine, and authenticate with OTP.
“But now that RBI has allowed RuPay credit cards to be linked with UPI, it allows the cardholders to avail of the short-term credit facility offered by credit cards to make UPI transactions instead of using funds from their savings account. Cardholders can scan the code, enter the recipient’s mobile number, and pay using their credit cards. Moreover, when you do not use your physical card, the risk of skimming at POS terminals or card loss is also eliminated,” explains Sachin Vasudeva, director, Paisabazaar, a digital consumer credit marketplace.
Challenges
By linking credit cards with UPI, cardholders will benefit from the ease of use and will have more opportunities to use their credit cards. While it offers more convenience, it could also lead to overspending if not used judiciously. It can be difficult to track frequent big and small UPI transactions that consumers make using their credit cards, which could lead to a considerable increase in credit card bills. If not paid on time, hefty finance charges may be levied. Consumers should always track their spending and spend only as much as they can afford to pay back on time.
