RBI's Move To Link Credit Cards With UPI Is Welcomed: Experts

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.

At present, UPI facilitates transactions by linking savings or current accounts through users' debit cards.

RBI Governor Shaktikanta Das said that to start with Rupay credit cards issued by the RBI-promoted National Payments Corporation of India (NPCI) will be enabled with this facility, and the facility will be made available after system developments.

Akash Sinha, CEO and Co-Founder, Cashfree Payments said, "We welcome the RBI's move to allow credit cards (starting with Rupay) to be linked to the UPI accounts. This is an important step for enabling credit payments via UPI, which until now was only possible through linking overdraft accounts. Other options included linking savings and current accounts to UPI via debit cards/ Aadhaar. We believe that this will significantly contribute to the Digital India imperative. In May 2022, UPI processed more than Rs 10 trillion worth of transactions, witnessing a doubled volume and value of transactions in a year's time.

"Cashfree Payments is a certified and compliant payments solutions provider and we believe in an inclusive nature of services and products which also resonates with UPI operations. The central bank's announcement is well-timed and provides us with an added encouragement to continue our efforts to assist the payments industry accelerate the digitalisation journey and promote financial inclusion", he added.

Saurabh Puri, Chief Business Officer - Credit Cards, Zaggle said,  “UPI is one of the biggest success stories in India and RBI’s announcement of linking RuPay credit cards with UPI is a progressive move to catalyse digital payments in the country. A lot of small value transactions that are happening today will now automatically come under the purview of credit cards, which is one big advantage to grow the volume of cards and also increase the overall coverage. There is now also a huge convenience factor for the customers because UPI is a frictionless way of transacting. It is still not clear how the Merchant Discount Rate (MDR) will be applied for UPI transactions linked to credit cards.”

Deepti Sanghi, Co-Founder and CEO, Kodo said, “The announcement by RBI on linking UPI platforms with credit cards is indeed a welcome move. UPI is increasingly becoming one of the most favoured payment alternatives for consumers transacting online; with Rs 594.6 crore transactions amounting to Rs 10.40 lakh crore in the month of May 2022 alone. RBI has offered a lucrative solution of synchronising credit cards on UPI platforms, this move will encourage the reach and utility of both credit cards and UPI. The acceptance infrastructure for credit cards can dramatically increase as merchants will be able accept credit card payments over their UPI accounts."

"A number of our corporate card customers have requested for the ability to link their cards to UPI to be able to make all kinds of payments related to their company expenses seamlessly. However, since there is no MDR charged to merchants for UPI payments, there is an open question of how will the credit card issuers cover their cost of capital and how will the underlying infrastructure support this. We are confident that the RBI, the banks and the NPCI will collaboratively formulate a directive, keeping all essential factors in mind", she added.

Rupesh Nambiar, CFO, Global PayEX said, "First, is the decision pertaining to the transaction limit on e-mandates for recurring payments. While there are 6.25 crore mandates with Indian merchants, only 3,400 mandates have been secured with international merchants. The RBI’s decision to increase the limit per transaction, from Rs 5,000 to Rs 15,0000, is going to bring in more international merchants within the fold of the Indian payments infrastructure, and further drive cross-border payments."

"Second, pertains to the decision to link credit cards, starting with RuPay, to the UPI platform. This must be seen in the context of the fact that an increasing number of countries, such as Nepal and Singapore are linking UPI to their digital payments framework as well. Additionally, credit card spends in April 2022 have increased by 79 per cent y-o-y. In May 2022 itself 2.4 lakh crore transactions were processed via UPI. By linking credit cards as well as the digital payments network of other countries to the UPI platform, we will witness a surge in the number and in the volume of transactions processed", he added.

Nambiar continued, "Third, relates to the subsidy claim process under the Payment Infrastructure Development Fund Scheme, which has set the target of increasing adoption of POS, QR codes, and mobile payments across tier 3 to tier 6 cities. This scheme is critical to ensure that a huge chunk of the Indian population is not left out of the burgeoning digital payments infrastructure. By extending, and simplifying the subsidy claim process, the RBI is doubling down on India’s digital payments infrastructure by incentivising adoption and growth in non-urban areas. This is crucial to increase access to financial services."