BENGALURU: The Reserve Bank of India (RBI) on Wednesday proposed to allow linking of credit cards on the UPI (United Payments Interface) platform, aiming to boost digital payments. Currently, UPI facilitates transactions by linking savings or current accounts through users’ debit cards. With this new proposal, users can link their credit cards with UPI.
To begin with, the Rupay credit cards will be linked to the UPI platform. “This will provide additional convenience to users and enhance the scope of digital payments,” RBI Governor Shaktikanta Das said. UPI has become the most inclusive mode of payment in the country with over 26 crore users and 5 crore merchants on the platform. In May 2022, about 594 crore transactions amounting to Rs 10.4 lakh crore were processed through UPI.
Also, the central bank has increased the limit for e-mandates on cards for recurring payments from Rs 5,000 to Rs 15,000. “To further facilitate recurring payments like subscriptions, insurance premium, education fees of larger value under the framework, the limit is being enhanced from Rs 5,000 to Rs 15,000 per transaction,” the RBI said.
In order to secure card details of consumers, the RBI in September last year mandated the adoption of tokenisation. This will replace the actual credit and debit card details with an alternate code called the token. Talking about it, RBI deputy governor T Rabi Sankar said the progress has been satisfactory. With just three weeks to go for meeting the tokenisation deadline, he said 16 crore tokens have been created till now.
Many digital payments firms such as Razorpay and Paytm have welcomed the RBI’s move to link credit cards with UPI. However, Kotak Institutional Equities in a note said that they don’t want to be optimistic on this development as the success of UPI has been its convenience on consumer side and high confidence to accept at the merchant side. “This is likely to change when a credit transaction is proposed that has an MDR(merchant discount rate). It is still early days and we don’t think that this guideline addresses the concern of MDR on credit cards."