Linking RuPay credit cards to UPI: Why it helps, and where it doesn’t

In comparison to regular UPI payments linked to a user’s savings or current account, credit card-enabled UPI transactions are more rewarding.

Over the last few years, the Unified Payments Interface (UPI) has made digital payments easier for customers as well as merchants, allowing quick and hassle-free transactions. Now that the Reserve Bank of India (RBI) has allowed the linking of UPI apps to RuPay credit cards, consumers can add their cards to UPI and use the available credit limit to make purchases. This integration extends the benefits of UPI beyond savings accounts and debit cards, and allows users to earn loyalty points with card usage.

But remember, by offering an easier interface, UPI transactions via credit cards might also encourage a tendency to over spend, hence, you must monitor your transactions regularly to understand your monthly bills, and  ensure you only  spend as much as you can afford to pay back on time.

What you get when you link your Rupay card to UPI

If you own a RuPay credit card, here is why you must link it to UPI:

1. Earlier, one could only use the funds available in one’s savings account to make payments using UPI. Now, with the linking of RuPay credit cards to UPI, users will have access to credit even for smaller, day-to-day transactions. Thus, users will benefit from wider acceptability among merchants, and avail an interest-free period of up to 50 days.

2. Unlike traditional online payments made via credit cards that require details like CVV and OTP, using credit cards for UPI is much simpler — you only need to enter the UPI code. Additionally, even for offline (in-person) transactions, you do not need to carry the card. You can simply scan a QR code or enter the mobile number of the recipient to make a payment.

3. In-person credit card payments are only possible at shops and merchants who have POS (point-of-sale) machines. However, linking a credit card to UPI offers users a wider choice in merchants, as most have already set up QR codes to receive payments via UPI. This allows users to make credit card payments at smaller shops that do not have POS machines.

4. In comparison to regular UPI payments linked to a user’s savings or current account, credit card-enabled UPI transactions are more rewarding as most cards offer loyalty points or cashback on transactions. Additionally, some cards offer accelerated rewards on UPI payments. For instance, HDFC RuPay UPI Credit Card offers up to 3 percent `cashpoints’ on transactions like groceries, dining, and utility spends.

5. UPI supports different transactions like merchant payments, utility bill payments, etc. Using UPI, cardholders can consolidate and track and manage various expenses like bill payments, shopping, etc.

6. Since multiple UPI apps are available in the market, these platforms try to incentivise usage by offering promotions and discounts from time to time. Therefore, linking credit cards to UPI gives users a chance to enjoy these offers even when the user does not have enough funds in their savings account.

7. Instant payment processing is among the major benefits of UPI.

8. By linking credit cards to UPI, users can also get easy access to funds during emergencies.

Also read: RBI proposes card-on-file tokenisation: Tighter security, more convenience for customers

Limitations of credit cards on UPI

While RuPay linked credit card payments come with lots of benefits, they also have certain limitations. You need to be aware that these transactions do not permit cash withdrawal at merchants, peer-to-peer (P2P) lending, and card-to-card payments. Further, standard UPI transaction limits are applicable. Cardholders must accordingly plan their credit card usage on UPI.