Pros and Cons of Integrating Rupay Credit Card to UPI


   RuPay and the Unified Payment Interface, operated by the National Payments Corporation of India (NPCI), play an important role in driving the economy towards cashless transactions. In June 2022, the RBI issued an initiative where an individual would be able to make payments by just scanning QR codes and linking their credit cards to UPI. This initiative makes the individual’s life easier by making fund transfers and digital payments a simple process.

Here are some benefits a consumer can enjoy if he links the credit card to UPI:

  • Linking UPI with credit cards enables consumers to perform various seamless transactions on a single platform. This integration improves online shopping, bill payments, and peer-to-merchant transfers, enhancing the user experience overall.
  • Now, a user doesn’t need to carry a credit card all the time. Linking UPI to credit cards enables seamless, convenient, and hassle-free payments.
  • It offers instant processing and facilitates quick fund transfers for emergencies.
  • Throughout the year, users may enjoy cashback offers and different reward points.
  • This reduces the possibility of fraud by using multi-factor authentication with MPINs and biometrics.

Here are some cons:

  • This initiative causes a greater risk of overspending, which increases impulsive purchases due to the easy payment process.
  • You need to set a monthly spending budget every time there is a lack of financial discipline.

  Using UPIs can simplify purchases but has drawbacks as well. On one side, there are quick transactions, but on the other side, merchants need to bear the additional cost when customers use UPI. There is a concern about the Merchant Discount Rate (MDR) as per the Chief Operating Officer of Business Banking and Digital Consumer Banking at Fincare SFB, Jatinder Mohan Singh Shah.

 The Merchant Discount Rate is a charge rate that merchants need to pay to banks for accepting online transactions. With high transaction volumes, larger retailers typically bargain lower MDR across all car networks, including RuPay, VISA, and MasterCard. The interchange pricing is zero for transactions below 2000 rupees for small merchants. Merchants who are unable to use UPI transactions, just need proper training.

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