RBI Latest News: UPI payments via credit cards: How you can make UPI payments via credit, debit cards

RBI Governor Shaktikanta Das announced that the RBI will now allow UPI payments via RuPay credit cards.

RBI allows UPI payments via Rupay credit cards

To increase the reach of digital payments across India, the Reserve Bank of India (RBI) allows credit cards to be linked to Unified Payment Interface (UPI) accounts. This new development was announced by Reserve Bank of India (RBI) Governor Shaktikanta Das during the monetary policy review press conference. Initially, RuPay credit cards will be linked to UPI to add more convenience to the life of users, he added. Visa and Mastercard will soon follow.

“UPI has become the most inclusive mode of payment in India. Currently, over 26 crore unique users and five crore merchants are onboarded on the UPI platform. In May 2022 alone, 594.63 crore transactions amounting to Rs 10.40 lakh crore were processed through UPI,” said RBI in an official statement.

It further added that UPI currently facilitates transactions by linking Savings/Current Accounts through debit cards of users. The interoperability of PPIs has also facilitated access of PPIs to the UPI payment system for undertaking transactions. To further deepen the reach and usage, it is proposed to allow the linking of credit cards to UPI. 

“To start with, Rupay credit cards will be enabled with this facility. This arrangement is expected to provide more avenues and convenience to the customers in making payments through the UPI platform. This facility will be available after the required system development is complete. Necessary instructions will be issued to NPCI separately,” said the RBI statement.

Also Read: How Does RuPay Card Differ From Visa Or Mastercard?

How will UPI payments via credit card work?

By adding a credit card (or a debit card) to UPI apps, you can make payments at point-of-sale (POS) terminals without having to physically swipe your card. All you have to do is scan the merchant’s QR code and choose one of your added cards to make the payment. To further strengthen security for users, once you initiate the payment, a one-time password (OTP) is sent to you on your registered mobile number. You can then use this OTP to complete the transaction. 

This is expected to boost digital payments further. Currently, QR codes are accepted by more than 30 million merchants in India. Just in 2021, payments worth US$3 trillion were processed digitally in the country. A study by PhonePe and Boston Consulting Group (BCG) estimates that this number will triple to US$10 trillion by 2026.

Also Read: 5 Practical Tips For Using A Credit Card During The Pandemic

E-mandate limit on recurring transactions increased

The RBI also announced an increase in the limit of standing instruction on debit cards, credit cards and other prepaid payment instruments for recurring transactions. Currently, the limit is Rs 5000, which is being increased to Rs 15000. Before January 2021, the limit was Rs 2000.

“Requests have been received from stakeholders to increase the limit under the framework to facilitate payments of larger value like subscriptions, insurance premia, education fee, etc.," said the RBI Governor. “To further augment customer convenience and leverage the benefits available under the framework, it is proposed to enhance the limit from Rs 5,000 to Rs 15,000 per recurring payment," he added. 

Also Read: Auto-Debit Rules For All Card-Based Transactions To Change From October 01, 2021: Check How This New Rule Impacts You?

To add payees for recurring payments on their credit cards, users have to authorise an e-mandate once to register the beneficiary, which is confirmed via an additional factor authorisation (AFA) in the form of an OTP. On successful validation, the e-mandate will be registered, subject to other requirements by the issuer being fulfilled.

As a measure to minimise risk, the card issuer will send a pre-transaction notification to the cardholder at least 24 hours before the actual debit. Cardholders also have the option to withdraw an e-mandate at any time.

To increase the reach of digital payments across India, the Reserve Bank of India (RBI) allows credit cards to be linked to Unified Payment Interface (UPI) accounts. This new development was announced by Reserve Bank of India (RBI) Governor Shaktikanta Das during the monetary policy review press conference. Initially, RuPay credit cards will be linked to UPI to add more convenience to the life of users, he added. Visa and Mastercard will soon follow.

“UPI has become the most inclusive mode of payment in India. Currently, over 26 crore unique users and five crore merchants are onboarded on the UPI platform. In May 2022 alone, 594.63 crore transactions amounting to Rs 10.40 lakh crore were processed through UPI,” said RBI in an official statement.

It further added that UPI currently facilitates transactions by linking Savings/Current Accounts through debit cards of users. The interoperability of PPIs has also facilitated access of PPIs to the UPI payment system for undertaking transactions. To further deepen the reach and usage, it is proposed to allow the linking of credit cards to UPI. 

“To start with, Rupay credit cards will be enabled with this facility. This arrangement is expected to provide more avenues and convenience to the customers in making payments through the UPI platform. This facility will be available after the required system development is complete. Necessary instructions will be issued to NPCI separately,” said the RBI statement.

Also Read: How Does RuPay Card Differ From Visa Or Mastercard?

How will UPI payments via credit card work?

By adding a credit card (or a debit card) to UPI apps, you can make payments at point-of-sale (POS) terminals without having to physically swipe your card. All you have to do is scan the merchant’s QR code and choose one of your added cards to make the payment. To further strengthen security for users, once you initiate the payment, a one-time password (OTP) is sent to you on your registered mobile number. You can then use this OTP to complete the transaction. 

This is expected to boost digital payments further. Currently, QR codes are accepted by more than 30 million merchants in India. Just in 2021, payments worth US$3 trillion were processed digitally in the country. A study by PhonePe and Boston Consulting Group (BCG) estimates that this number will triple to US$10 trillion by 2026.

Also Read: 5 Practical Tips For Using A Credit Card During The Pandemic

E-mandate limit on recurring transactions increased

The RBI also announced an increase in the limit of standing instruction on debit cards, credit cards and other prepaid payment instruments for recurring transactions. Currently, the limit is Rs 5000, which is being increased to Rs 15000. Before January 2021, the limit was Rs 2000.

“Requests have been received from stakeholders to increase the limit under the framework to facilitate payments of larger value like subscriptions, insurance premia, education fee, etc.," said the RBI Governor. “To further augment customer convenience and leverage the benefits available under the framework, it is proposed to enhance the limit from Rs 5,000 to Rs 15,000 per recurring payment," he added. 

Also Read: Auto-Debit Rules For All Card-Based Transactions To Change From October 01, 2021: Check How This New Rule Impacts You?

To add payees for recurring payments on their credit cards, users have to authorise an e-mandate once to register the beneficiary, which is confirmed via an additional factor authorisation (AFA) in the form of an OTP. On successful validation, the e-mandate will be registered, subject to other requirements by the issuer being fulfilled.

As a measure to minimise risk, the card issuer will send a pre-transaction notification to the cardholder at least 24 hours before the actual debit. Cardholders also have the option to withdraw an e-mandate at any time.

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