While the Reserve Bank of India (RBI) has started linking credit cards with Unified Payments Interface (UPI) and RuPay credit cards, in all probability the central bank will allow the same for other card networks such as Visa and Mastercard, too.
Speaking at the Global Fintech Fest 2022, Vivek Deep, executive director, RBI, said, “We have started with RuPay cards. But if you see the vision document of our department, the idea is to generally link credit cards with UPI. This we believe has the potential to be a game changer in this field. This will enhance the benefit of credit and UPI to a large number of populations.” In his monetary policy address in June this year, the RBI governor Shaktikanta Das had said, “To begin with, the Rupay credit cards will be linked to the UPI platform. This will provide additional convenience to users and enhance the scope of digital payments.”
There was lack of clarity on whether the RBI will extend this facility to credit cards of other card networks, such as Visa, Mastercard, etc.
Earlier this week, the National Payments Corporation of India (NPCI) launched the RuPay credit card on UPI. Currently, customers of Punjab National Bank, Union Bank of India, and Indian Bank will be the first to be able to use RuPay Credit Card on UPI with BHIM App.
With the linkage of RuPay Credit Card on UPI, customers will benefit from the increased opportunity to use their credit cards, and merchants will benefit from the increase in consumption by being part of the credit ecosystem with the acceptance of credit cards using assets like QR codes, the NPCI said. RuPay Credit Cards will be linked to a Virtual Payment Address (VPA) i.e., UPI ID, thus directly enabling safe, and secure payment transactions.
In RBI’s payments vision document, the central bank has said, currently, a UPI user can only link the bank account (savings / current account) and the debit card to the UPI Virtual Payment Address (VPA). To offer more avenues and greater convenience to users in making payments through UPI platform, feasibility of linkage of credit cards and credit components of banking products to UPI shall be explored.
While linking credit cards to UPI is meant to give more options to the consumers, it also expands the market. The objective is to provide small credits to the 250 million UPI users. Also, the idea is to look at enabling 50 million merchants to start accepting credit.