UPI transactions: RBI provides a way to protect your bank account, take advantage of a free credit period

Apart from making Unified Payments Interface (UPI) payments by linking savings and checking accounts through debit cards, you can now also use your credit card on the digital platform as the Reserve Bank Of India (RBI) – in its monetary policy meeting on Wednesday – Allowed linking RuPay Credit Card to UPI.

With its ease of use, UPI is fast becoming one of the most preferred payment methods for both online and offline transactions, registering a whopping 594.6 crore transactions which amounts to a whopping Rs 10.40 lakh crore in the month of May 2022 only.

Until now, UPI users could pay from the available balance in their savings or current account. To take advantage of a credit period for purchasing goods or availing services, users had the option to link their accounts with only overdraft facilities.

However, there are some instances where with a minor mistake or carelessness of the users, the bank accounts associated with the users’ UPI have been hacked resulting in the accounts being emptied by the fraudsters.

The RBI move would reduce the risk of UPI users’ bank accounts being emptied by the cyber fraudsters as the users now have the option to unlink their bank accounts.

Since very few people have access to overdrafted accounts, the ability to link Rupay credit cards to UPI will now allow more and more people to pay later by taking advantage of the free credit period available to users of the credit cards. .

So, aside from making the UPI transactions more secure, the RBI move will also help increase the reach and usability of both credit cards and UPI.

However, it’s not clear how credit card issuers will cover their cost of capital, as no Merchant Discount Rate (MDR) is charged to merchants for UPI payments.

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