Link between RuPay credit card and UPI will be operational in 2 months, says NPCI CEO
The linking of Rupay credit cards to the Unified Payments Interface (UPI) will happen within the next two months, Dilip Asbe, Chief Executive Officer (CEO) of the National Payments Corporation of India (NPCI) said on Friday.
He added that several public sector entities have shown interest in linking their cards to UPI.
The NPCI is in the process of drafting the guidelines on the matter. These will be sent to the Reserve Bank of India (RBI) for approval within the next 10 days.
Major credit card issuers such as SBI Cards, BoB Cards, Axis Bank and Union Bank of India have shown interest and sent their proposals to NPCI.
The NPCI will develop the guidelines in consultation with the ecosystem. It will send a formal proposal to the RBI, and after approval by the apex bank, it will be operationalized.
“We expect the RuPay credit card linked to UPI to be operational in a few months. We are talking about BoB Cards, SBI Cards, Axis Bank and Union Bank of India. Once we get approval, we should be able to start in two months,” Asbe said.
“We are looking at how we can expand the market. The goal is how we can get back to 250 million users and how the bank can start granting smaller credits. Additionally, we look at how the 50 million merchants can start accepting credit. We may need to take care of small traders and protect them from MDR (trader discount rate). Existing credit card merchants can continue to pay,” he added.
MDR is a commission calculated as a percentage of the transaction paid by merchants to banks for payment processing.
The card-issuing bank, after keeping part of it, divides the rest between the payment network and the point-of-sale terminal suppliers. Around 2-3 million merchants accept credit card payments while around 50 million of them accept UPI.
Although there is no MDR on UPI payments, the MDR on debit card transactions is capped at 0.9%. However, there is no cap on the MDR for credit cards.
Usually credit cards (non-RuPay) attract MDR up to 2% of the transaction amount against 0.5% in the case of debit cards. RuPay debit cards do not attract MDR, while RuPay credit cards usually have lower MDR than Visa/Mastercard.
In the last monetary policy meeting, the RBI decided to allow the linking of credit cards to UPI, which until now is used as an “immediate payment” service. Here, money is directly debited from a customer’s bank account for any transaction.
Currently, UPI is linked via customers’ debit card to their savings or current account. And, allowing UPI to link with credit cards is intended to give customers more choices.