Discussion RBI proposes to link credit cards to UPI

  • Thread starter Bapun
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I think merchant didn't know who will send money from UPI with debit or credit card link due to huge transactions. So merchant or even consumer will not bear MDR in UPI transactions with credit card.
Why RBI is being so id*otic can't they let's thing be like as it is. This will insecure small shopkeepers who are already afraid of day to day scams. Instead they should work with India Post Payment Bank type system to develop POS machine at less price to accept all type of transection including free UPI transection with inbuilt voice assistance like PayTM and PhonePe has.
Axis Ace credit card was launched aiming link to Google pay. Didn’t know much about it as it was only for Android devices. Just before I got Ace, I switched to iOS.
Google pay allows linking of Visa and MasterCard Credit cards of select banks, this is not exclusively for Axis Ace card. The Ace card just has the advantage of getting 5% unlimited cashback on recharge and bill payment done on Google pay using the card.
The cards of other supported banks can still be used for NFC payment (ones that support contactless feature like Visa PayWave) by tapping the NFC enabled phone at the merchant POS terminal without having to carry the physical card. It also supports QR code based payment at supporting merchant establishments, but this is for mVisa code for Visa cards and masterpass code for MasterCard and does not support payments over UPI framework by paying to a UPI QR code using the linked card on Google pay.
Ideally yes thats how it is meant to function, but a lot of factors will need to be worked out for this to be implemented. Using credit cards at merchant POS attracts MDR charge which is why many merchants levy an additional charge for paying by CC. Now if RBI and NPCI enable UPI on CC they will have to figure out who will bear the cost of the MDR if they are providing the UPI transaction for free to the customer.
Using this technique it would be very easy for people to keep rotating money between the CC and bank account and using it during the interest free period instead of paying the heavy fees linked to cash withdrawal on CC. To prevent this misuse NPCI will surely levy a 2% charge for CC to CC or CC to Bank account through UPI transfer and maybe CC to merchant transaction may be free if the merchant agrees to bear the MDR involved.
Multiple possibilities -

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.
Some phonepe transactions allow credit cards to be used.

For Example, When I pay on Medplus store, they send an SMS to my registered mobile number to pay using Phonepe app. During the payment, it lists UPI linked bank accounts as well as other cards that I have already stored on my phonepe account. But I have to enter OTP during this if I select a credit card. The entire transaction takes time based on my network and how fast I receive CC OTP

If the implementation is something similar to this, then it may not be that useful.
If the implementation is something similar to this, then it may not be that useful
When CC gets activated on UPI network then it won't need any OTP it will just need you to enter the UPI pin that you set for the card just like you set for your linked Bank account
That's Bharat QR
Yes Bharat QR was launched with the objective of becoming the prominent cross platform universal payment QR which would support payments through UPI apps as well as support Visa and MasterCard credit card payment through mVisa and masterpass platforms but Bharat QR didn't gain mass adoption like UPI did. So now RBI and NPCI are trying to bridge that gap by enabling CC directly on UPI network rather than having to rely on their individual QR payment platforms.
When CC gets activated on UPI network then it won't need any OTP it will just need you to enter the UPI pin that you set for the card just like you set for your linked Bank account
One more drawback some CC providing firm are not sending debit messages like bank so we can't verify how much money got debited after successful transaction window got close by us in mobile
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