Linking Credit Cards with UPI

The Reserve Bank of India has proposed to allow linking of credit cards with the Unified Payments Interface platform.

The credit cards which are issued by National Payments Corporation of India (NPCI) will be the first ones who will be enabled with the UPI.
The Unified Payments Interface (UPI) is also managed by the National Payments Corporation of India (NPCI).
The significance of UPI today is significant, as the numbers speak about the milestone it has created.
According to the data released by RBI, it is estimated that there are over twenty six crore users on the platform including the five crore merchants on the platform.
In May 2022, about 594 crore transactions amounting to ₹10.4 lakh crore were processed through the interface.
As of now the savings and current accounts linked with debit cards are enabled with UPI.

This will provide the consumers with an additional avenue to make the payments in a easier way.
The move will also further increase the usage of credit cards and thus will increase its reach.
People who do not wish to use their savings for making payments can make use of credit cards.
This will avail them of a longer pay-back period.
One more important aspect is that it will reduce the dependence on the PoS machines
As of now, especially in the semi urban and rural areas there is a shortage of credit card Point of Sale machines.
So if the credit card is linked to UPI, the payments can be made using the QR code.

It is predicted when this provision once comes into force will increase the overall spending in the economy.
Certainly, this move will also increase the digital payments and also increase the average ticket size.
Currently, the ticket size of a financial transaction in the UPI is 1,600 so by linking it to credit card will increase the ticket size of a financial transaction to Rupees 3,000 to 4,000.

Source The Hindu

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