Reserve Bank of India Governor Shaktikanta Das had said last month that credit cards will be allowed to be linked to UPI and initially only RuPay credit cards, India’s domestic card network. Linking of credit cards with UPI was allowed in the monetary policy review meeting held in June.
Until now, customers were only allowed to link their UPI accounts through debit cards. If this is possible it will be a great convenience. The RBI governor has also informed that with the linking of credit cards to UPI, the potential of the digital payment sector will increase. Currently, customers can link their Savings Bank account with UPI through debit cards.
UPI linking can also be done using credit cards if this is possible. If so, UPI transaction can be done using credit card. Payment can be made easily using credit card UPI. With credit card linking, you can also use the loan money to make transactions through UPI. At present credit card can be used only through e-POS machine. Once RuPay credit cards are linked with UPI, this service will also come to Visa and Master cards.
Merchant Discount Rate
UPI’s merchant discount rate is zero. Dilip Asbey said that while other credit card service providers charge merchant discount rate to small merchants, NPCI has an obligation to protect merchants. NPCI is targeting 250 million customers. They are also examining how 50 million merchants can accept credit cards. They have an obligation to protect merchants from the merchant discount rate. But they can continue to pay the existing credit card service providers, he said.
What is Merchant Discount Rate?
Merchant discount rate is the fee charged by banks to merchants for facilitating credit-debit card money transactions in shops and stores. It is fixed at a fixed percentage of a transaction. Small traders also have to pay MDR. This facility is used to promote currencyless transactions. Now with linking credit card to UPI, merchants may reduce the use of POS machine by paying MDR rate.
