The Central Bank of India offered on Wednesday an integration between UPI and credit cards, a significant boost to the fast-growing payment protocol that has become the most popular online transaction method in the South Asian market.
“UPI facilitates transactions by linking savings or checking accounts through users’ debit cards,” Reserve Bank of India Governor Shaktikanta Das said at the briefing.
“Now it is being proposed to allow credit card linking on the UPI platform, for starters, RuPay credit cards will be linked to UPI,” he said. Rupay is India’s own card network and is promoted by the National Payments Corporation of India, a special body of the RBI that also oversees UPI payments.
UPI, a five-year-old payment protocol created by a coalition of retail banks, is the most popular money transfer method in India. In May, the UPI network processed over 5.9 billion transactions, up from 21 million in the same period five years ago.
Allowing UPI to work on top of credit cards, he said, “will provide additional convenience to users and enhance the digital payment experience.”
The Governor did not share the monetization aspect of UPI credit card transactions.
UPI does not currently have a monetization model that many fintech executives have. expressed concern about and asked the RBI to reassess. The lack of this information is also critical as the credit card tool operates with some of the highest merchant discount rates that are shared between banks and payment service providers.
At the briefing, the central bank also raised its key interest rate for the second month in a row. The RBI rate-setting group voted unanimously to raise the buyout rate by 50 basis points to 4.90%.
“Inflation has risen sharply, far above the upper limit,” Das said. “Much of the rise in inflation is primarily due to a series of supply shocks that could be related to the war.”
Credit: techcrunch.com /