RBI allows linking of Credit Cards to UPI platforms

[chinmay]

News just coming in; RBI allows Credit card to be linked to UPI

It would give great boost to CC payments and acceptance in India

@TechnoFino dada and other specialist on the forum; what’s your take?

 

[chinmay]

RBI Monetary Policy | Credit cards can now be linked to your UPI, starting with RuPay

Until now customers could only link their bank accounts through debit cards to UPI.

www.moneycontrol.com

 

[TheTrickySid]

News just coming in; RBI allows Credit card to be linked to UPI

It would give great boost to CC payments and acceptance in India

@TechnoFino dada and other specialist on the forum; what’s your take?

I think it might only work with Merchant Payments and not P2P 😅

 

[Souvik]

I am not the specialist but certainly looks better for consumers, but credit utilization would increase now, debit cards will go out of fashion very soon this way.

More and more credit = higher inflation

Now we can now buy 1 Re Eclairs via UPI/credit card too . If there is no MDR involved now for credit cards based UPI's, I can even send money from credit card to my friend/mom/wife via UPI and use it myself for 45 days as interest free money. I can even make a FD out of that credit card money and get 3% interest p.a from the bank with bank's money. More the limit on your credit card, better the Ponzi scheme.

 

[Souvik]

I think it might only work with Merchant Payments and not P2P 😅

If so for merchants we were already paying POS, with credit cards directly. So its just another layer of UPI with no substantial value addition.

 

[chinmay]

If so merchants we were already paying POS, with credit cards directly. So its just another layer of UPI with no substantial value addition.

I guess the MDR on UPI or Rupay is quite less as compared to usual POS machines issued by banks.

I am not the specialist but certainly looks better for consumers, but credit utilization would increase now, debit cards will go out of fashion very soon this way.

More and more credit = higher inflation

Now we can now buy 1 Re Eclairs via UPI/credit card too . If there is no MDR involved now for credit cards based UPI's, I can even send money from credit card to my friend/mom/wife via UPI and use it myself for 45 days as interest free money. I can even make a FD out of that credit card money and get 3% interest p.a from the bank with bank's money. More the limit on your credit card, better the Ponzi scheme.

This is a quite good analysis. Not sure if P2P transfers would be allowed as this would lead to interest free money as rightly said.

But maybe merchant acceptance would rise as they would receive money directly in real-time and not wait for monthly settlements

 

[Souvik]

I guess the MDR on UPI or Rupay is quite less as compared to usual POS machines issued by banks.

This is a quite good analysis. Not sure if P2P transfers would be allowed as this would lead to interest free money as rightly said.

But maybe merchant acceptance would rise as they would receive money directly in real-time and not wait for monthly settlements

MDR on Rupay its less, but they have ideas to cover VISA and Master card also, which has higher MDR. With less MDR, I have doubts how will Rupay offers survive in the long run, if they cant charge, cant give offers.

Interest free money as you said rightly on a small scale, we are not rich enough as a country to have QE1, QE2.....QE4. Lets have some more debt this way yay !

You are correct on Merchant acceptance, that is going to have some traction.

 

[iAmPm]

News just coming in; RBI allows Credit card to be linked to UPI

It would give great boost to CC payments and acceptance in India

@TechnoFino dada and other specialist on the forum; what’s your take?

I think it will be very much helpful to customers. if you see out there in your day to day small purchase transactions shops won't be having POS machine to swipe card but most off them do have QR to scan.
Other benefit I see is there will be no 100 200 rupees transaction entries in the passbook.

 

[Batmanbaba]

Good way to rotate money now... Offically... Coz initially there wont be any charges... But when people will start misusing it... Which people will do then it might add some charges in future

 

[akshayhs]

News just coming in; RBI allows Credit card to be linked to UPI

It would give great boost to CC payments and acceptance in India

@TechnoFino dada and other specialist on the forum; what’s your take?

I had already linked my OneCard to Google Pay. But it was never activated, I could still see the card in accounts and debit cards. Maybe now it will start working.

 

[Abhishek012]

Good way to rotate money now... Offically... Coz initially there wont be any charges... But when people will start misusing it... Which people will do then it might add some charges in future

You guys are wrong. Only saving/current account Bank linked P2P UPI and P2M UPI has Zero MDR.

OD accounts linked UPI charge 1.5% MDR (for example ICICI paylater UPI). Same pay Credit card linked to UPI will also charge some MDR.

Other types of UPI payment also charged MDR fees to merchant for example - UPI AutoPay, UPI IPO, UPI International transaction, UPI B2C etc

 

[ashwink]

As per sources currently they bring this feature only for RuPay credit cards.

 

[Abhishek012]

Multiple possibilities -

1) If you know, you can linked your OD (Over Draft) account to UPI. NPCI charged 1.5% MDR on OD linked UPI payment to merchants.

Best example - ICICI Paylater UPI.

Merchants who are not interested to pay 1.5% MDR fee for OD UPI, we get "This merchant is not supported" error when scan & pay through ICICI Paylater UPI.

2) Banks may restricted to only 10% of your credit amount utilize through UPI and valid only on Merchant UPI transactions.

3) According to the RBI, 50 per cent transactions through UPI are below Rs 200. Its possible Credit linked UPI only allowed low-value transactions under Rs200 and allowed only 5 or 10 times per day to Merchant UPI payment only.

4) NPCI may create a new Credit rail for UPI and charge upto 2% MDR fees.

 

[dav33]

Diners card might have this benefit sooner than other visa cards

 

[kochiro]

I think upi for cc will come with a cap just like wallets around 4k-9k per month. If you are spending than that at a merchant then that merchant probably owns a POS machine as alternative.

 

[AllSeeker]

Multiple possibilities -

1) If you know, you can linked your OD (Over Draft) account to UPI. NPCI charged 1.5% MDR on OD linked UPI payment to merchants.

Best example - ICICI Paylater UPI.

Merchants who are not interested to pay 1.5% MDR fee for OD UPI, we get "This merchant is not supported" error when scan & pay through ICICI Paylater UPI.

2) Banks may restricted to only 10% of your credit amount utilize through UPI and valid only on Merchant UPI transactions.

3) According to the RBI, 50 per cent transactions through UPI are below Rs 200. Its possible Credit linked UPI only allowed low-value transactions under Rs200 and allowed only 5 or 10 times per day to Merchant UPI payment only.

4) NPCI may create a new Credit rail for UPI and charge upto 2% MDR fees.

Good points, loopholes will be there but they will close them eventually. Just like wallets and all those tricks to transfer money from CC to a/c.

If you abuse it somewhere there will be fail safe, 1-2% charges are expected. Or CC may or may not give rewards for such transactions too, since basically CC identifies type of transaction through merchant codes with the help of POS. UPI scan codes will be accommodated eventually for that too.

 

[Abhishek012]

Good points, loopholes will be there but they will close them eventually. Just like wallets and all those tricks to transfer money from CC to a/c.

If you abuse it somewhere there will be fail safe, 1-2% charges are expected. Or CC may or may not give rewards for such transactions too, since basically CC identifies type of transaction through merchant codes with the help of POS. UPI scan codes will be accommodated eventually for that too.

UPI also identifies type of transaction through merchant codes.

Here you see few examples - UPI MCC Codes (Rs 2 Lakh limit per transaction for specific categories in UPI) -


Implementation of Rs 5 Lakh limit per transaction for specific categories in UPI -



Image source - https://www.npci.org.in/PDF/npci/up...ransaction for specific categories in UPI.pdf

and

https://www.npci.org.in/PDF/npci/upi/circular/2021/UPI-OC-127-Implementation-of-Rs-5-Lakh-limit-per-transaction-for-specific-categories-in-UPI.pdf

 

[TechnoFino]

My opinion about Credit Card UPI Linking

 

[hriday.haria]

Hi Dada @TechnoFino
What kind of impact will these changes by RBI of linking UPI with CC bring to apps like YAPER.

Will Income Tax Notices on CC Spends increase in the coming few years ?

 

[TechnoFino]

Hi Dada @TechnoFino
What kind of impact will these changes by RBI of linking UPI with CC bring to apps like YAPER.

Will Income Tax Notices on CC Spends increase in the coming few years ?

I don't think so.... Business spending from your credit card is not a problem according to ITD.
but bank can punish you.