On June 8, the Reserve Bank of India (RBI) recommended linking credit cards to UPI networks. Governor Shaktikanta Das declared that the procedure would begin with RuPay credit cards for the time being. Currently, UPI allows transactions by linking customers’ debit cards to their savings or current accounts.
UPI transactions have made life simpler for buyers in India. While many customers hold multiple credit and debit cards, the process of paying with cards may be a little complicated. First of all, you need to carry the card physically with you at the time of purchase. Then, the card has to be swiped. Many a time, it also involves an OTP that comes to the buyer for confirmation.
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UPI transactions are relatively easy and hassle-free. That is exactly why more and more people have started using it as it needs just a mobile phone, which most of the buyers carry with them anyway. As RBI Governor Shaktikanta Das noted, in May 2022 alone, 594.63 crore transactions amounting to ₹10.40 lakh crore were processed through UPI. So far, a major disadvantage of UPI transactions has been the inability to utilise credit cards for any transaction.
Ramesh Narasimhan, CEO – Worldline India, said, “UPI today is by far the most popular payment option for consumers online. In order to further deepen the reach and usage of UPI while keeping consumer preference at the epicenter, the RBI has offered an innovative solution to permit the linking of credit cards on to UPI platform. This will not only encourage consumers to continue making payments via UPI but also provide the benefit of short-term credit that credit cards extend.”
Until now, clients’ debit cards were linked to their savings or current accounts were only allowed for transactions to take place.
“This arrangement is expected to provide more avenues and convenience to the customers in making payments through UPI platform. This facility would be available after the required system development is complete,” the RBI said on June 8.
This is a major development as buyers will now be able to pay with their credit cards via UPI transactions. While transactions will be restricted to RuPay credit cards only for now, other major credit card providers like Visa and Mastercard are expected to be gradually chipped in as well.
These banks provide RuPay credit cards
If you do not have it, you may be wondering which banks provide RuPay credit cards. There are some banks that allow its customers to have RuPay credit cards: Punjab National Bank (PNB), IDBI Bank (IDBI), Union Bank, State Bank of India (SBI), Bank of Baroda, Federal Bank and Saraswat Co-operative Bank. RuPay also provides co-brand cards with a few banks like HDFC Bank, SBI, PNB and Union Bank.
SBI Cards, Paytm share prices gain
After the RBI announcement related to UPI transactions, SBI Cards share prices gained 4.2 percent while share prices of One97 Communications Ltd, the parent company of Paytm, rose 3.2 percent.