📌 Making UPI Payments via RuPay Credit Cards: What’s Changing?

G GOWTHAM
In recent years, the National Payments Corporation of india (NPCI) has enabled users to link their RuPay credit cards with UPI apps such as PhonePe, google Pay, Paytm, Slice, and others. This allows you to use your credit limit to pay via UPI — similar to how you’d use your debit card or bank account.

While this feature brings convenience and flexibility, there are cost-related developments and merchant charge implications that could affect how widely this option is used and at what cost.

📉 Why It Might Become Costly

🔸 1. Merchant Discount Rate (MDR) on Credit‑UPI Payments

When you pay with a RuPay credit card on UPI — especially at merchant shops — it is not the same as a regular bank‑to‑bank UPI transfer (which is typically free). Payments through credit (including via UPI) often attract a merchant discount rate (MDR) of around 1.1%–2% on the transaction value.

  • Unlike bank‑to‑bank UPI transfers (which are generally free for users), credit card‑linked UPI transactions involve fees because the merchant or payment aggregator often pays this MDR to process credit payments.
  • Some merchants may pass this cost on to customers in the form of higher prices or “convenience fees” if they choose to do so.
👉 Example: On a ₹10,000 purchase, a 2% MDR amounts to ₹200 — a cost some small or low‑margin merchants find significant.

🔸 2. Thresholds Where Charges Apply

NPCI and payment processors differentiate between smaller and larger payment amounts:

  • For transactions up to ₹2,000, many merchants may offer zero charges for RuPay credit card UPI payments — similar to typical UPI payments.
  • However, for payments above ₹2,000, MDRs can apply — sometimes up to around 1% per transaction — which is usually borne by the merchant but may indirectly affect prices or acceptance.
This structure can reduce acceptance among some merchants, leading them to disable RuPay credit card UPI payments altogether.

🛍️ Why Some Merchants Resist Accepting RuPay Credit Card UPI

Many small shop owners and merchants are turning off RuPay credit card UPI acceptance because:

  • They are charged MDR by payment aggregators, which reduces their profit margins — especially on higher‑value sales.
  • In some areas, merchants prefer bank account UPI (debit) payments, which remain free for them.
  • Some payment platforms or QR systems may automatically disable the credit card option when MDR applies.
The result: many users report that RuPay credit card via UPI isn’t accepted at all merchant QR codes, especially for larger amounts.

💸 What It Means for You as a User

✅ 1. No Direct Fees for Basic UPI Payments

  • When you pay via bank account UPI or debit card UPI, users generally do not pay any charges — even on RuPay networks.
⚠️ 2. RuPay Credit Card via UPI Might Have Indirect Costs

  • Even though the end user usually isn’t charged a separate fee by the bank or UPI app, the fact that merchants pay MDR means:
    • Merchants may sideline acceptance of RuPay credit payments on UPI.
    • Some businesses may pass cost impacts indirectly (e.g., higher prices or restricting UPI credit use).
📊 3. Rewards and Interest Still Apply

  • RuPay credit card rewards (cashback or points) can still apply on UPI transactions, depending on your card’s terms.
  • However, if you don’t pay your full credit card bill on time, you’ll still incur interest charges, just like any credit use.
🔍 Summary: Can It Be Costly?

Aspect

Direct Fee for You?

Merchant Impact

Acceptance

Bank‑to‑bank UPI

🟢 Free

🟢 Free

🟢 Widely accepted

RuPay Credit Card on UPI

🟡 Generally no direct fee

🔴 MDR cost for merchants

⚠️ Some merchants disable it

Large Amounts (>₹2,000)

🟡 User still free

🔴 Higher MDR

⚠️ Less accepted

💡 Key point: You typically will not see a direct extra fee for paying with your RuPay credit card via UPI — but merchant charges and reduced acceptance can make this option less convenient or costly indirectly.

📌 Tips to Use RuPay Credit Card on UPI Wisely

  • Check acceptance at a merchant before relying on UPI credit.
  • For higher amounts, consider paying directly with a credit swipe or tap machine if it’s cheaper and accepted.
  • Pay your credit bills in full and on time to avoid interest.
  • Compare rewards: some cards offer special bonuses for UPI spends.
 

Disclaimer:

The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of any agency, organization, employer, or company. All information provided is for general informational purposes only. While every effort has been made to ensure accuracy, we make no representations or warranties of any kind, express or implied, about the completeness, reliability, or suitability of the information contained herein. Readers are advised to verify facts and seek professional advice where necessary. Any reliance placed on such information is strictly at the reader’s own risk.

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