Making UPI Payments via RuPay Credit Cards: Exploring the Benefits.


In June 2022, the Reserve Bank of India (RBI) introduced a new initiative allowing individuals to link their credit cards to the United Payments Interface (UPI). This feature, however, is currently available only through select banks that have enabled the linking of their RuPay credit cards to UPI.


Exciting news came on May 31, 2023, when BOB Financial Solutions, a wholly owned subsidiary of Bank of Baroda, announced that Bank of Baroda credit card customers can now utilize RuPay Credit Cards on popular UPI-enabled apps such as BHIM, PhonePe, Paytm, Google Pay, Slice, MobiKwik, and PayZapp. Following suit, Canara Bank and Kotak Mahindra Bank introduced UPI payment facilities for merchants through their RuPay credit cards.

Several other banks have also enabled the linking of RuPay credit cards to UPI, including Axis Bank, HDFC Bank, Indian Bank, Kotak Mahindra Bank, Punjab National Bank, Union Bank of India, and YES Bank.

According to K Satyanarayana Raju, MD and CEO of Canara Bank, linking RuPay credit cards to UPI provides a seamless and secure digital payment method for customers. Dilip Asbe, MD and CEO of the National Payments Corporation of India (NPCI), added that this integration grants customers more flexibility and options for making payments across various merchant outlets. The inclusion of credit cards in the UPI ecosystem is expected to enhance penetration of digital payments.

This integration between credit cards and UPI represents a significant step towards promoting digital payments. Previously, users could only link their bank accounts or debit cards to UPI apps, but now they have the option to link select banks' RuPay credit cards and utilize them for payments.

Ankur Mittal, Co-Founder and Chief Technology Officer of Card Insider, a platform that monitors the Indian credit card industry, highlights the convenience of using credit cards for payments at small vendors who do not possess point-of-sale (POS) card swipe machines. Sumanta Mandal, Founder of TechnoFino, another platform that tracks the Indian credit card industry, adds that many rural merchants face challenges in accepting credit card payments due to factors such as the merchant discount rate (MDR), requirements like POS machines, and paperwork. However, they readily accept UPI payments due to the simplicity of setting up the UPI system and accepting payments. Consequently, allowing card users to link their RuPay credit cards to UPI benefits both the digital payment system and overall digital payment penetration.

RuPay credit cards linked to UPI offer various benefits across different categories, including travel, shopping, and fuel. Sanjiv Chadha, Managing Director and CEO of Bank of Baroda, highlights that credit cards on UPI provide customers with the convenience of transacting on UPI while enjoying the advantages of a credit card, without the need to carry the physical card. Linking credit cards to UPI offers customers the flexibility to use credit cards for daily expenses and significant purchases, leveraging the short-term credit facility provided by credit cards. Rohit Chhibbar, Head of Credit Cards at Paisabazaar, emphasizes that users can enjoy immediate access to funds, as well as benefits like rewards and cashback, through credit card UPI payments. Compared to UPI payments linked to savings accounts, credit card UPI payments can help users save more through reward points and other cashback benefits. Additionally, users can access various milestone benefits and privileges, as pointed out by Ankur Mittal.

For frequent travelers and individuals who regularly refuel their vehicles, UPI-linked credit cards can be used for fuel expenses, as there is no fuel surcharge on UPI payments Furthermore, maintaining a RuPay credit card exclusively for UPI payments allows users to track their spending directly from the card statement. However, it's important to note that there are restrictions on UPI payments made with credit cards. While there is no limit on the number of transactions, there is a maximum UPI limit of Rs 1 lakh per card per day or the credit limit, whichever is lower. Currently, the facility only allows payments to merchants and does not permit person-to-person, card-to-card, or cash-out transactions from RuPay credit cards, as clarified by Dilip Asbe.

Presently, only RuPay credit cards can be linked to the UPI system. Mandal highlights the limitation that most banks issue credit cards on the Visa and Mastercard networks, which prevents their integration with UPI. 

When linking a RuPay credit card to a UPI app, it's essential to monitor transactions to avoid overspending, which could result in high credit card dues. Failure to pay credit card bills on time may lead to hefty finance charges and penalties from the card-issuing bank. To maintain financial discipline and avoid unnecessary expenses, it is advised to track UPI-linked transactions and spend within one's means, ensuring timely repayment of credit card bills.

In conclusion, the integration of RuPay credit cards with the UPI system offers a host of benefits for users, including convenience, access to credit facilities, rewards, and cashback. By leveraging UPI for credit card payments, individuals can save more and enjoy the privileges and advantages provided by their credit cards. However, users should remain cautious and track their spending to maintain financial discipline and avoid unnecessary financial burdens.


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