Impact of Linking Credit Card to UPI
UPI has become the most sought payment channel for digital payment and fund transfer, and now you can link your credit cards to it post RBI recent approval. Therefore, UPI has become the most preferred transaction channel for consumers for making and receiving digital payments.
Earlier, consumers were able to link only debit cards to UPI, but now consumers can also link their RUPAY credit Cards to UPI. This would be more convenient those who don’t want to use their physical card for online payment.
This step also helps the consumers to secure their credit card credential in the hands of users. Linking Credit Card to UPI would help drive digital payment acceptance to the next level with increasing penetration across any city, town and region wherever it is difficult to roll out POS terminals.
As you know, any change also brings both advantages as well as disadvantages along with it. Likewise, linking credit card to UPI will have both advantages as well as disadvantages that we are going to discuss further.
Advantages of Linking Credit Card to UPI.
Multiple Transactions: Earlier all the UPI transactions were reflected in users bank account but now after linking credit card to UPI, all the transactions would be reflected on credit card statement instead of the bank account.
Time to Repay: As we know credit card payment is made after 40-45 days, while debit card payment gets deducted instantly. Linking credit card to UPI will give more time to repay the funds instead of deducting instantly.
Rewards: Most of the credit cards have their reward program in terms of rewards, cashback or other benefits. Therefore, user can take benefits of such incentives if credit card is linked with UPI.
Convenience: Linking a credit card to UPI offers convenience, allow users to make seamless and prompt digital payments. Users can make payments directly from their credit card without the need of using physical credit card. Since only RUPAY Credit Cards are stored in UPI, Virtual RUPAY Cards could also be used linking credit card to UPI. Hence, virtual cards can also become popular in coming time.
Wider Acceptance: Since UPI is widely accepted across various platforms and merchants, making it more convenient for users to make payments using their linked credit cards.
Disadvantages of Linking Credit Card to UPI
Rupay Credit Cards : Linking Credit Card to UPI is available on RUPAY Credit Cards only. Others like Master, Visa and American Credit Cards are still not accepted to link with UPI. This poses a major drawback for many users. Because, most of users have been using VISA or Master Card Credit Cards. Since Rupay Credit Cards are mostly accepted across Indian Platforms and merchants, People prefer VISA or Master Credit Cards to RUPAY Credit Cards.
Transaction Fees: There is MDR which is charged to the Merchants i.e. Merchants will have to pay more when people use credit card on their UPI, Therefore, some merchants may not have enabled the option of linking Credit Card to UPI.
Merchant Acceptancy: Many merchants may disable the acceptance of credit card payments on UPI due to the charges involved in it. In such case, a user cannot make payment through UPI linked with credit card. Obviously, users have to make payment through UPI linked with their bank account.
In conclusion:
Linking Credit Card with UPI offers certain benefits to the users. However, in some cases users will not be able to use UPI linked with Credit Card. Some small merchants do not prefer payment from UPI linked with Credit Cards, due to additional charges are involved in it. People have been inclined to digital payment post credit card linkage with UPI as it has become more convenient and secure for digital payment.