RBI has proposed linking credit cards to UPI.
Can this be beneficial to fintechs?
Will this bring BNPL services under the regulation?
Let’s take a look.
Yes, this is indeed a positive sign for fintechs. How?
1) Linking credit cards and UPI can boost credit card usage and make digital payments more prevalent in India. A win-win for both fintech platforms like Paytm, PhonePe and credit card firms.
2) Users are benefited too. Now UPI payments can take place with the choice among savings account, debit, and credit card. NPCI’s RuPay credit cards will be the first to be linked.
3) Banks also have their slice of advantages via merchant transaction fees from credit cards and UPI credit.
But there are a few challenges that I observe here –
1) Can users accept paying merchant fees on UPI credit instead of free UPI transactions?
2) What if credit card firms are not ready to waive that fee?
3) Identifying the root of payment (credit/debit/savings account) will be complex.
4) Dispute management and refunds are another story altogether.
All in all, it’s a mix of pros and cons. What do you think about this proposal? Curious to know.
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