UPI integration with Rupay Credit Cards Underway; scores 657 Cr transactions worth INR 10.73 Lakh Cr in Aug 2022

UPI payments

UPI saw 657 Cr transactions in August 2022, a nearly 5% month-on-month (MoM) increase from July 2022 when it saw 628 Cr transactions. Transaction volume also increased (though by less than 1%) from INR 10.62 Lakh Cr to INR 10.72 Lakh Cr ($135.10 billion).

The total transaction volume in 2022 so far stands at 77.94 Lakh Cr ($981.72 Billion) and has already surpassed the volume of 2021. The value of UPI transactions in 2021 was more than INR 73 Lakh Cr (approx. USD 970 Billion), a year-on-year increase of over 110% from transactions worth 33.87 Lakh Cr in 2020.

In July 2022, NPCI announced its plans to start operational linking of RuPay credit cards with UPI by September 2022. While the numbers are still at their highest every month, the percentage increase is only in the single digits.

With the advent of UPI on credit cards, the average ticket size of UPI transactions will be positively affected to a large extent. Currently, the average UPI ticket size is INR 1,979.90 (in 2022), while the Reserve Bank of India (RBI) recorded credit card transactions worth INR 87,682 in July 2022, and the average value of a credit card transaction in the country is around INR 4,740.

The linking of credit cards and UPI is expected to boost credit card usage and further digitization of small payments within the country. However, many questions about its implementation still need answers.

Earlier the views of industry experts were corroborated on the impact of the merchant discount rate (MDR) on credit cards concerning UPI, who said that these MDR charges will play a big role in deciding the outcome of this integration.

MDR is a fee typically charged from merchants by a payment infrastructure provider. Currently, the credit card industry has a business model based on a 2%-3% MDR and interest model, while UPI on debit cards has zero MDR.

Experts suggest that the success of this integration will also increase the acceptance of credit cards in the country and consequently the disbursement of loans at a low cost.

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