RuPay credit card UPI to succeed if small transactions under 10%: Asbe

Lenders will promote RuPay credit card on Unified Payments Interface (UPI) as long as the value of transactions derived from small merchants, who have been exempted to pay merchant discount rate (MDR), is not more than 10 per cent of the total value of RuPay credit card transactions, said Dilip Asbe, Managing Director & Chief Executive Officer (MD&CEO), National Payments Corporation of India (NPCI), on Wednesday.
 

NPCI, which oversees retail payments and settlements, last month launched the RuPay credit card on UPI feature and mandated there will be “NIL” MDR (no interchange, PSP, and app provider charges) on transactions up to Rs 2,000. This structure has been worked out to incentivise the smaller merchants to accept payments in such form.
 

The Reserve Bank of India (RBI) in its June monetary policy this year approved linking of RuPay credit cards to UPI, to provide a seamless, digitally enabled credit card lifecycle experience to the customers.
 

The idea was to expand the merchant ecosystem, which accepts credit card payments and also include smaller merchants in the ecosystem, which will eventually help them grow their business.
 

“On QR codes, today one uses UPI to make payments and when we add RuPay credit cards on UPI, the payment product will be RuPay credit on the UPI railroads. We thought customers should be able to use their RuPay credit cards on small merchants. This has two benefits: one, the small merchant becomes part of the credit system, and second, as these small merchants grow, they will move to the regular merchant category and then start paying MDR,” Asbe said.
 

“There is a huge opportunity to grow 10-15 times on the demand side (consumer side) also. And the growth is going to come from Tier-2 cities and below, where there are no Point of Sales (PoS) machines for small merchants,” Asbe said.
 

RuPay credit card on UPI feature is yet to see a high number of transactions as large issuers of credit cards have not onboarded the feature. Transactions are expected to rise once they start offering this feature.