SBI Card, ICICI Bank defer RuPay credit card on UPI till June: Report

Major credit card issuers in the country, such as SBI Card, ICICI Bank, and Axis Bank that were likely to go live on the “RuPay credit card on UPI feature” by March 2023, had to defer the plan by another three months, reported Business Standard.

This is because technical changes on the issuers’ side have caused a delay in these players going live on the new UPI feature.

Now, they are likely to go live by June. Axis Bank the fourth-largest credit card issuer, could go live earlier, sources aware of the development said.

Currently, three public sector banks (PSBs) — Union Bank of India, Indian Bank, and Punjab National Bank — are live on this feature. HDFC Bank, the country’s largest credit card issuer, is also live on this feature. Further, BHIM, Mobikwik, and Paytm app customers can link their RuPay credit card on UPI.

Other apps are also enhancing their tech platforms to enable linking of credit cards on UPI. In June last year, the Reserve Bank of India (RBI) decided to allow linking of credit cards to UPI, which so far was being used as a “pay now” facility. This, it said, will provide more convenience to users and enhance the scope of digital payments.

The idea behind this move is to expand the size of the merchant base that accepts credit card payments.

Roughly 2-4 million merchants accept credit cards while over 50 million merchants accept UPI payments. This feature is looking to include 50 million UPI merchants in the formal credit economy. This is expected to drive consumption in a very big way.

According to National Payments Corporation of India (NPCI), RuPay credit cards on UPI will provide a seamless and digitally enabled credit card experience for customers. They will benefit from the ease and the increased opportunity to use their credit cards. And, merchants will benefit from the increase in consumption with acceptance of credit cards using asset lite QR codes.

Consequently, the NPCI came out with guidelines that said there will be no extra charges levied on small merchants for transactions of up to ₹2,000 processed via RuPay credit cards on UPI. The circular by NPCI also said small merchants will be exempted from interchange, app provider, and other tariffs.

This feature has only been allowed for RuPay credit cards. However, in all probability, RBI is expected to allow it for other card networks such as Visa and Mastercard. Experts have said that the RuPay credit on UPI feature may scale up the credit card market by 2-3 times.

The RBI has now proposed to enhance the scope of payments by enabling transfer to/from pre-sanctioned credit lines at banks.

This means the UPI network will facilitate payments financed by credit from banks. This feature can augment or even act as a substitute to credit cards, which cater to a very niche segment of the population.