The National Payments Corporation of India, or NPCI, which is the country’s retail payment entity, plans to implement the linking of credit cards to the Unified Payments Interface (UPI) network, the chief executive said. of the organization, Dilip Asbe. This comes more than a month after Reserve Bank of India Governor Shaktikanta Das announced permission to link credit cards to UPI to facilitate payments.
“We are talking with BoB Cards, SBI Cards, Axis Bank and Union Bank of India. We should be able to submit our proposal to the Reserve Bank of India (RBI) in ten days and once we get approval we should be able to start in two months,” Asbe said at an organized event. by the Bank of India. Baroda on Friday July 22.
On June 8, Shaktikanta Das, during his announcement at the Monetary Committee (MPC) meeting, said he was proposing to allow credit card linking on UPI platforms. This decision, however, was to test the Merchant Discount Rate (MDR) benefit available to UPI users. According to experts, zero-MDR benefits are one of the major reasons for the growth of UPI and its preference among merchants instead of using cards. On credit cards, banks and payment service providers divide the amount paid by the merchant for each card transaction made. This is around 2-3% of the total payment in case of credit cards. “Maybe we should have taken care of small merchants and protected them from MDR while existing merchants handling credit cards can continue to pay,” Asbe said.
RBI Deputy Governor T. Rabi had said in June that ‘going to the pricing structure is taking the leap’ and RBI ‘will see how it will be priced’, after being asked about the price difference between UPI and credit cards and how the two will be synchronized.
“The fundamental goal of linking credit cards to UPI is to provide customers with a wider choice of payments. Currently, UPI is only tied to debit cards and savings bank accounts, but now it will be tied to credit cards as well. We will introduce the credit card linking arrangement with UPI and see how prices develop,” he said.
In accordance with guidelines that came into effect on January 1, 2020, UPI and RuPay attract zero-MDR, which means that there are no fees on these transactions.
“Currently, UPI facilitates transactions by linking savings/checking accounts through users’ debit cards. It is now proposed to allow credit card linking on the UPI platform. To start with, Rupay credit cards will be linked to the UPI platform,” Shaktikanta Das said in June. The arrangement is expected to provide more opportunities and convenience for customers to make payments through the UPI platform, the RBI said in a statement.
Read all Recent news and recent news here