RuPay credit card-UPI linkage to be operational in 2 months, says NPCI CEO

The linking of Rupay credit cards to Unified Payments Interface (UPI) will be done in the next two months, Dilip Asbe, chief executive officer (CEO), National Payments Corporation of India (NPCI), said on Friday.

He added that several public sector entities have shown interest in linking their cards with UPI.

NPCI is drafting the guidelines on the issue. These will be sent to the Reserve Bank of India (RBI) for approval in the next 10 days.

Large credit card issuers such as SBI Cards, BoB Cards, Axis Bank and Union Bank of India have shown interest and sent their proposals to the NPCI.

NPCI will come up with the guidelines in consultation with the ecosystem. It will send a formal proposal to the RBI, and after the apex bank’s nod, it will be operationalised.

“We are hoping that the RuPay credit card linking to the UPI should get operationalised in a couple of months. We are talking to BoB Cards, SBI Cards, Axis Bank and Union Bank of India. Once we get an approval, we should be able to start in two months,” Asbe said.

“We are looking at how we can expand the market. The objective is how we can go back to the 250 million users and how the bank can start doing smaller credits. Also, we are looking at how the 50 million merchants can start accepting credit. We may have to take care of the smaller merchants and protect them from the MDR (merchant discount rate). The existing credit card servicing merchants can continue to pay,” he added.

MDR is a fee calculated as a percentage of the transaction that is paid by merchants to banks for processing payments.

The card-issuing bank, after retaining a part of it, shares the rest among the payment network and point-of-sale terminal providers. Around 2-3 million merchants accept credit card payments while around 50 million of them accept UPI.

While there is no MDR on UPI payments, MDR on debit card transactions is capped at 0.9 per cent. There is, however, no cap on MDR for credit cards.

Usually, credit cards (non-RuPay) attract MDR up to 2 per cent of the transaction amount against 0.5 per cent in the case of debit cards. RuPay debit cards attract no MDR, whereas RuPay credit cards typically have lower MDR than Visa/Mastercard.

In the last monetary policy meeting, the RBI decided to allow linking of credit cards to UPI, which so far is being used as “pay now” facility. Here, money is debited from a customer’s bank account directly for any transaction.

Currently, UPI is linked through the debit card of customers to their savings or current account. And, allowing linking of UPI with credit cards is meant to provide customers with more choices.