RuPay credit card on UPI to earn equal rewards like other cards from Sept 1

The RuPay credit card issuing banks must abide by the contents of the circular by September 1, 2024, according to the NPCI

The National Payments Corporation of India (NPCI) has asked banks issuing RuPay credit cards to ensure parity on reward points and benefits from September 1.

The payments regulator, in a directive, has asked banks issuing RuPay credit cards to ensure that reward points and other offers on RuPay credit cards for Unified Payments Interface (UPI) transactions are not lower than those available for RuPay credit cards, except in cases where the issuer does not receive an interchange fee.

The directive comes after NPCI observed that reward points, benefits, and features for RuPay credit cards on UPI transactions are not equivalent to those offered on RuPay credit card transactions.

“Issuers shall ensure that reward points, benefits, features, and other ancillary offers should not be lower (directly & indirectly) for RuPay Credit Cards on UPI transactions and RuPay credit cards, except for transactions where issuer does not earn any interchange fee”, it said in the circular.

The Reserve Bank of India (RBI), in June 2022, allowed linking RuPay credit cards with UPI, which until then was being used as a pay now facility, where money was debited from customer’s bank account directly for any transaction. In October 2023, the NPCI announced that interchange fees would be applicable on RuPay-UPI transactions. The interchange fee for RuPay credit card merchants on UPI transactions above Rs 2,000 is around 2 per cent. However, the customer do not have to pay any charges for carrying out transactions. 

Following this, several banks began offering digital versions of their existing credit cards to customers but it came as a RuPay card. 

RuPay Credit Cards on UPI provide a seamless, digitally enabled credit card lifecycle experience for the customers, who benefit from the increased opportunity to use their cards. Merchants benefit from the increase in consumption by being part of the credit ecosystem with acceptance of credit cards using asset lite QR codes.

As many as 16 banks facilitate the product, including Punjab National Bank, Union Bank, Indian bank, HDFC Bank, Axis Bank, Kotak Mahindra Bank, ICICI Bank.

Both, RBI and NPCI, are promoting credit on UPI as a game-changer because it has the potential to provide seamless access to credit to millions, making credit more convenient and affordable. Currently, credit on UPI is available through two offerings – ‘RuPay credit card on UPI’ and 'Credit Line on UPI’.

Earlier this week, NPCI Managing Director and Chief Executive, Dilip Asbe, had stated that credit transactions on UPI are touching Rs 10,000 crore each month, of which approximately Rs 100-200 crore is from the “credit line on UPI” facility, while the remainder comes from the Rupay credit card on UPI facility.