It was not long ago that the Indian banking systems jumped on the bandwagon of instant retail bank transfers with UPI. The acceptance of this payment method at nearly all merchant outlets screams its prevalence and domination over other payment methods like credit cards. But that does not mean that all Indian bank account holders would have to abandon credit card usage just to be able to pay at more outlets.
It’s now possible to merge the characteristics of both credit cards and UPI. Holders of RuPay credit cards from leading banks in India can activate UPI on their cards and send money instantly to merchants’ bank accounts on credit.
This method presents several benefits, such as:
- Consumers can leverage their credit line for larger purchases while taking advantage of instant settlement through UPI.
- Reward points can be earned and redeemed from transactions made using UPI-enabled credit cards. The exact value of the reward would differ between banks. Further, a bill payment and send money app may also offer additional rewards on certain transactions from UPI-enabled cards.
- Cardholders can scan QR codes and pay at retail outlets if card terminals aren’t available.
- Annual membership renewal fees may be waived for cardholders who spend above a certain threshold set by the bank.
- Certain banks allow an interest-free period for payments made using UPI on credit cards.
- Generally, the UPI and credit card PINs are different from each other. This provides better financial security.
Considerations:
- UPI payments made with credit cards will still have the same daily usage limit as regular bank-account-linked UPI payments.
- UPI activation is only allowed on RuPay cards from select banks. Customers with accounts in newly operational banks should check if their bank’s credit card is eligible.
- Certain transactions that would be allowed through regular UPI may be restricted when UPI is used on credit, such as transactions to a non-business account. The complete list of restricted transactions can be found on the website that has issued the card.
- UPI may have to be linked again every time a credit card is renewed or replaced.
- While reward points may be used for mobile recharge pay or travel, the rewards can have an expiration date and be capped at a monthly limit.
- The bank may charge a joining and renewal fee for those who want to activate UPI on their credit card.
- The credit line from the existing credit card is split with the RuPay UPI credit card.
- Certain payment apps may not support the linkage of UPI-enabled credit cards.
The Bottom Line:
Enabling UPI on credit cards can present many benefits, including the ability to earn both credit card and UPI rewards. However, the activation may also be accompanied by many limitations. The exact limitations would differ depending on the bank providing the card. Thus, every cardholder should thoroughly research their bank’s offerings before initiating an activation. Ultimately, the utility of this feature would only be suitable for those who make conscious decisions about the activation after weighing their options.