Unified Payments Interface (UPI) payments have been on a rise since its launch. India recorded 6.28 billion transactions worth Rs 10,62,991.76 (or about Rs 10.63 trillion) in July this year alone. In the first quarter of this year, India had recorded a total of 9.36 billion transactions amounting to Rs 10.25 trillion. As of now, 338 banks are live on the UPI networks.
Digital payments or UPI payments in India are driven by apps like BHIM UPI, Google Pay, PhonePe, Paytm, Amazon Pay and individual apps launched by the respective banks. Now, the Reserve Bank of India has come out with a new rule that will not only boost consumption but will also help UPI users by providing them with payment alternatives.
The National Payments Corporation of India (NPCI) launched the Rupay credit card on UPI platform on September 20, following an RBI policy move authorising it. Experts said that soon other banks’ credit cards will also be linked to the UPI.
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“UPI on Credit Card is likely to be a game changer as we will see an increase in the number of transactions on UPI with the payment instrument being credit cards. Initially, it will be allowed for RuPay credit cards only and going forward we expect that other scheme credit cards may also have this UPI linkage,” said Mihir Gandhi, Partner & Leader – Payment Transformation, PwC India.
So far, the UPI IDs used to be linked to the bank account of the respective users. However, the RBI has announced that three banks – Punjab National Bank, Union Bank of India and Indian Bank will come out with RuPay credit cards linked with UPI in BHIM App. This means, the credit card holders will be able to make UPI payments from their credit cards.
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How will users benefit from this?
You may be aware that credit cards provide an interest-free payment period of around 30-45 days. So, if users make UPI payments using their RuPay Credit Cards, they will get more time to pay back to the bank while earlier, the money was instantly deducted from their bank accounts.
This will also allow users to make purchases using UPI even if they don’t have money in their bank accounts. RuPay Credit Cards will be linked to a Virtual Payment Address (VPA) or UPI ID. So, when a user will scan a QR code or type the receiver’s UPI ID, he will get payment options from his bank account/s as well as from the RuPay Credit card.
