The National Payments Corporation of India (NPCI) has said there will be no charge for RuPay credit card use on Unified Payments Interface (UPI) for transactions up to ₹2,000. RuPay credit card has been operational for the last four years, and all major banks are enabled and are issuing incremental cards for both commercial and retail segments.
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About The Recent Changes:
RBI has approved linking of RuPay Credit Cards to UPI, which will provide a seamless, digitally enabled credit card lifecycle experience for the customers. Customers will benefit from the ease and the increased opportunity to use their credit cards. Merchants will benefit from the increase in consumption by being part of the credit ecosystem with acceptance of credit cards using asset lite QR codes. Credit cards can now be linked to a Virtual Payment Address (VPA) i.e., UPI ID (credit card number cannot be part of this), thus directly enabling safe, and secure payment transactions.
What The NPCI Said:
“During credit card on-boarding on the apps, the device binding and UPI PIN setting process shall include and be construed as customer consent for credit card enablement for all types of transactions,” a recent NPCI circular said. For international transaction enablement, the existing process from the app will apply to credit cards too, the circular dated October 4 said.
Nil Merchant Discount Rate (MDR) would apply for this category up to the transaction amount less than and equal to ₹2,000, it noted. Nil MDR (no interchange, PSP & app provider charges) shall apply for this category up to the transaction amount less than and equal to ₹2,000, said the circular. Merchant Discount Rate (MDR) is the cost paid by a merchant to a bank for accepting payment from their customers via credit or debit cards every time a card is used for payments in their stores.
Credit Card Linking:
Reserve Bank of India (RBI) Governor Shaktikanta Das on 21 September 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, Union Bank, Punjab National Bank and Canara Bank are issuing credit cards.
To enable linking of credit card on UPI, the ecosystem will have to enhance their tech platforms. While the issuers will enable linking of credit card accounts at customer’s end, the acquirers will enable the acceptance of linked credit card at merchant’s end. The initial phase of operationalisation will provide learnings and critical inputs, that can be used to fine tune the proposition in later phases to scale up the usage, the circular said.