Currently users split bills, pay their local vendors, taxi rides and retailers through UPI, the most popular smartphone-based payments mode in the country.
Elevate Your Tech Prowess with High-Value Skill Courses
| Offering College | Course | Website |
|---|---|---|
| Northwestern University | Kellogg Post Graduate Certificate in Product Management | Visit |
| IIT Delhi | IITD Certificate Programme in Data Science & Machine Learning | Visit |
| MIT | MIT Technology Leadership and Innovation | Visit |
But payments for transactions like hotel booking, airline tickets and large purchases at ecommerce stores are mostly made through credit cards. Till date, with UPI being hooked to one’s savings account, this was fine.
Now with credit cards enabled on UPI, NPCI is hoping to grab a share of those transactions as well.
“Regular limits on credit card transactions set by the user will be applied to UPI payments too, but the choice is with the issuer,” said a senior banker on the condition of anonymity.
‘Issuer’ stands for the bank which has issued the RuPay credit card to the customer. Credit cards have certain limits meant for security of the payment and also depending on the credit limit set for the customer.
Discover the stories of your interest
In a letter addressed to all banks which issue RuPay cards and are live on UPI, NPCI asked for enhancement of the limit for RuPay credit card UPI transactions.“(This will) enhance customer experience and enable customers to carry out high-value transactions on ecommerce, travel bookings (flight, hotel), healthcare services, educational institutes, etc.,” said NPCI in the letter dated November 16. ET has seen a copy of the letter.
NPCI declined to comment.
The letter said the limit on UPI payments through the credit account should be the least of the three options: the limit put by the bank on the card, limit put specifically for UPI payments on the card or the limit set by the customer.
Data from the Reserve Bank of India show that the average transaction size on credit cards hover above Rs 2,000, while merchant payments on UPI average around Rs 650. With credit card transactions enabled on UPI, NPCI wants to push up this number.
“UPI has anyway grabbed a major chunk of small-value payments, now it wants to go after the large-ticket-size transactions made at premium stores and organised retail too,” said a senior banker in the know.
Industry insiders said UPI-based credit card transactions are yet to pick up, given limited adoption. The share of RuPay credit cards in the market is very small compared to rivals Visa and Mastercard, they added.
“The global card schemes have better rewards, international payments experience and branding; as of now banks are issuing RuPay cards with low limits to new to credit customers,” said the founder of a payments startup. “Once that changes, credit on UPI will become more mainstream and larger spends will start flowing through the system as well.”
Currently only a few banks have gone live with the UPI product on RuPay credit cards. Some fintechs like Fibe (previously EarlySalary) are helping distribute such cards for these banks.
Fintechs believe that with credit opening up on UPI, there is a massive opportunity for them to tap into check out finance. ET wrote on November 20 that banks are treading carefully on this product given the heightened scrutiny on unsecured lending.
