No charge for RuPay credit cardholders on low-value UPI transactions
What's the story
National Payments Corporation of India (NPCI) has a piece of good news for customers and merchants. No charge will be levied on UPI transactions of up to Rs. 2,000 when using a RuPay credit card.
RuPay is a product of NPCI. Its credit card has been in use for the last four years. The Credit card on UPI feature was rolled out last month.
Context
Why does this story matter?
The government has allowed linking credit cards to UPI to provide customers with more choices to make payments.
The NPCI's decision to give concession to RuPay credit card transactions via UPI has two-fold benefits. Firstly, it will attract more small merchants into the fold and opens up more business opportunities.
Secondly, this will promote the usage of the domestic RuPay credit card.
No charge
Merchants will not have to pay banks
As per a circular issued by the NPCI, RuPay credit card transactions up to Rs. 2,000 on UPI will not be charged. This means that merchants will not be charged any fee for such transactions.
These merchants do not require separate onboarding. According to the circular, nil or zero MDR (Merchant Discount Rate) will apply to these transactions.
MDR
What is Merchant Discount Rate?
MDR is the amount shopkeepers pay to banks for facilitating credit or debit card payments every time a card is used in their shops. It is expressed as a percentage of the transaction amount.
Nil MDR means merchants will not have to pay the discount rate to banks for RuPay credit card transactions up to Rs. 2,000.
Customer consent
Device binding and UPI PIN setting construed as customer consent
The NPCI circular also spoke about customer onboarding. It said that device binding and UPI PIN setting "shall include and be construed as customer consent for credit card enablement for all types of transactions."
For enabling international transactions, the current process on the app will apply to credit cards as well.
The circular is applicable from October 4.