MUMBAI: The National Payments Corporation of India (NPCI) has said that there will be zero merchant fees for RuPay credit card on UPI for transactions up to Rs 2,000. Further, it said this would be accepted by all merchants using UPI without them having to be separately onboarded. The corporation has also made the issuance, payment and collection process for its credit card on UPI digital, which insiders say will result in ‘satchetisation’ of credit. With this new UPI platform enabling payments and collections, banks can issue virtual cards for customers with very low limits of, say, Rs 5,000, and it would still be viable as the costs would be very low.
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“This opens up many business opportunities that did not exist. Technically, banks can issue secured credit cards for 26 crore UPI users. At the same time, the ‘zero MDR’ (merchant discount rate — the fees that the shopkeeper pays to the bank for facilitating credit card payments) up to Rs 2000 will bring smallmerchants into the credit card fold. While banks will have to treat payments to small merchants as a service, they will have the opportunity to expand to a new customer base and make money from those who revolve their payments,” sources said.
Currently, Union Bank, Punjab National Bank and Canara Bank are already issuing cards, while SBI and HDFC Bank are going live on RuPay. In smaller towns where card acceptance is low, banks are reluctant to issue cards because there are notmany acceptance devices in that area. With RuPay credit card on UPI, all the merchants — including those onboard by fintechs like Paytm,PhonePe and Google Pay — will be able to accept credit card payments.
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The acceptance of RuPay credit cards across all QR codes will, however, not happen overnight. “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,” said NPCI in its operating circular for RuPay credit cards linked to UPI on Tuesday.
The circular also said that the zero MDR will apply for transactions less than and equal to Rs 2,000.
