According to Dilip Asbe, chief executive of the National Payments Corporation of India (NPCI), the organisation responsible for handling retail payments in the nation, the connection of credit cards to the UPI network will soon be implemented. This comes after Reserve Bank of India governor Shaktikanta Das suggested that credit cards might be linked to UPI to speed up payments.
“BoB Cards, SBI Cards, Axis Bank, and Union Bank of India are all being discussed. Asbe stated at an event hosted by the Bank, “We should he able to submit our proposal to the Reserve Bank of India (RBI) in 10 days, and once we receive approval, we should be able to start in two months.
On June 8, Shaktikanta Das announced that the Monetary Committee Meet (MPC) was considering allowing credit card connection on UPI networks. However, it was anticipated that this action would test the UPI users’ access to the Merchant Discount Rate (MDR) benefit. According to experts, one of the main factors behind the expansion of UPI and why retailers choose it over credit and debit cards is the zero-MDR benefits. Banks and payment service providers split the amount paid by the merchant for each card transaction made when using credit cards. In the case of credit cards, this is approximately 2% to 3% of the overall payment.
Asbe noted, “While the existing credit card servicing merchants can continue to receive payments, we might have to take care of the smaller merchants and safeguard them from the MDR.”
When asked about the price disparity between UPI and credit cards and how both will be synchronised, RBI deputy governor T. Rabi responded in June that “getting to the pricing structure is jumping the gun” and that RBI “will see how it will be priced.”
“At the moment, UPI speeds up transactions by connecting customers’ debit cards to their savings and current accounts. Credit card connection on the UPI platform is now being discussed. Shaktikanta Das had stated in June that the Rupay credit cards would initially be connected to the UPI platform. According to a statement from the RBI, this arrangement will give users greater options and ease when using the UPI platform to make payments.