India's central bank proposed an integration between UPI and credit cards in a significant boost for a fast-growing payments protocol that has become the most popular way to transact online.
The Governor of the Reserve Bank of India said that the Unified Payments Interface facilitates transactions by linking savings or current accounts.
He said that credit cards on the UPI platform would be linked to the UPI's credit cards. The National Payments Corporation of India is a special body of the Reserve Bank of India that handles UPI payments.
UPI is a payments protocol built by a coalition of retail banks. The UPI network processed over 5 billion transactions in May, up from 21 million five years ago.
He said that allowing UPI to work atop of credit cards will provide additional convenience to the users and enhance the scope of digital payments.
The governor didn't talk about the monetization aspect of UPI.
What does it mean to be able to link a credit card with UPI? Would it mean that the merchant won't have to pay MDRs while the customer still enjoys credit card benefits? :O
— Puneet Kumar (@puneetiitm) June 8, 2022
There is no monetization model for UPI, something many executives have requested the Reserve Bank of India to reexamine. Credit card instrument splits merchant discount rates with banks and payments service providers so the lack of this information is important.
The key interest rate was raised for the second month in a row. The rate setting panel of the Reserve Bank of India voted to raise the repo rate by 50 basis points.
Inflation has gone past the upper tolerance level. A lot of the rise in inflation is due to a series of supply shocks.
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