Home Discount rate India’s central bank allows credit card linking with UPI

India’s central bank allows credit card linking with UPI


India’s central bank on Wednesday proposed an integration between UPI and credit cards to give a significant boost to a fast-growing payment protocol that has become the most popular way to conduct online transactions on the South Asian market.

“UPI facilitates transactions by linking savings accounts or checking accounts through users’ debit cards,” said Shaktikanta Das, Governor of the Reserve Bank of India during a briefing.

“It is now proposed to allow linking of credit cards on the UPI platform to begin with, RuPay credit cards will be linked to UPI,” he said. Rupay is India’s card network, which is promoted by the National Payments Corporation of India, a special agency of RBI which also oversees UPI payments.

UPI, a five-year-old payment protocol built by a coalition of retail banks, is the most popular way for Indians to transact. In May, the UPI network processed more than 5.9 billion transactions, up from 21 million during the same period five years ago.

Allowing UPI to operate on top of credit cards will “provide added convenience to users and improve the reach of digital payments,” he said.

The governor did not share the monetization aspect for UPI above credit cards.


UPI currently has no monetization model, which many fintech executives have expressed concern about and have asked RBI to reassess. The absence of this information is also critical as the credit card instrument operates on some of the highest merchant discount rates, which they share with banks and payment service providers.

During the briefing, the central bank also raised the key rate for a second consecutive month. The RBI’s rate-setting committee voted unanimously to increase the repurchase rate by 50 basis points to 4.90%.

“Inflation has risen sharply well beyond the upper tolerance level,” Das said. “Much of the rise in inflation is primarily attributed to a series of supply shocks that may be war-related.”