In the coming days, UPI payment can now be done by credit card also. The Reserve Bank of India made this announcement on Wednesday. The Reserve Bank will soon start this facility. This feature will start from Rupay credit card. Talking about UPI, it is a banking system through which money can be transacted or paid on the payment application. Your UPI ID is a type of address that identifies you on UPI.
UPI is currently the most popular mode of payment in the country. About 260 million users and 50 million merchants are connected to this platform. The main objective of linking credit cards with UPI is to provide more payment options to the customers. Currently, only UPI users can avail the facility of transactions by adding a debit card and savings/current account. With the introduction of this facility, digital transactions will also get more speed.
The linking of credit cards with UPI will start with NPCI-issued credit cards (Rupay Credit Cards) promoted by RBI. With the development of the system, this facility can be rolled out for credit cards based on other gateways including MasterCard and Visa. The system will make it easier for those who need to withdraw cash from a credit card or transfer money to a bank. There is an additional charge in both cases. This way UPI payment can be done by credit card With this facility of Reserve Bank, it will now be possible to make payment without swiping the credit card.
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For this, first of all, the credit card has to be linked with UPI. After this payment can be made directly by scanning the QR code. While making the payment, you will have the option of using which credit card or debit card you want to make the payment. As soon as you start making payment through the UPI app, an OTP will be sent to your registered mobile number. The payment process will be completed as soon as the OTP is submitted. In the current system, there is no charge for payment through UPI. Whereas credit card companies depend on Merchant Discount Rate (MDR) for online payment.
Which does not take any charge from anyone on every payment. This means that for every transaction done with options other than UPI and Rupee cards, merchants will have to pay a certain amount of the transaction amount. From 1 January 2020, the MDR on transactions done with UPI and Rs. That is, there is no charge. Due to this, merchants across the country adopted UPI. However, after the RBI announcement, it is not yet clear how the MDR will be applicable on UPI transactions for linking credit cards.
This is because in the current scenario, credit card transactions attract the highest MDR. That is, about 2 percent to 3 percent. It will also require clarification on whether banks will have to waive MDR on transactions done through UPI-linked credit cards. Apart from this, RBI has also started other facilities. These include increasing the auto debit limit for recurring payments and doubling the home loan limit and introducing doorstep facility in co-operative banks.
