Thursday, 9th June 2022

Table of contents

1   News Snapshot

a  

Linking of credit card to UPI

b  

QS World University Rankings

c  

Amendments to IT Rules 2021

2   This Day in History

a  

Lal Bahadur Shastri becomes 2nd Prime Minister of India

3   Terms & Concepts

a  

Defence Acquisition Council

b  

Type 1 Diabetes

c  

LLCM Programme

d  

Ex Khaan Quest 2022

4   Editorial of the day

a  

RBI leans harder to rein in inflation, but rebound in services will put upward pressure on prices: Indian Express

b  

Healthcare in India is ailing. Here is how to fix it: Indian Express

5   Case Study of the Day

a  

Rice Husk Furniture

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News Snapshot

Linking of credit card to UPI


In News

The Reserve Bank of India (RBI) recently allowed the linking of credit cards on the UPI platform.

About the News

  • Recently, the RBI decided to allow even credit cards to be linked to UPI (Unified Payments Interface).
    • As of now, UPI could be linked only to savings and current accounts through users’ debit cards for facilitating transactions.
  • To begin with, the RuPay credit cards will be linked to UPI.
  • Both the RuPay network and UPI are managed by the same organisation – the National Payments Corporation of India (NPCI).
  • Linking Rupay credit cards to UPI will add more avenues and convenience to customers

Significance of the move

  • The move will give a push to credit culture for smaller items in urban and rural areas alike, given UPI’s widespread adoption.
  • It will provide a significant boost to overall credit card spends and off-take in the market. This will lead to increase in Financial Inclusion.
  • The integration also opens up avenues to build credit on UPI through credit cards in India, wherein a number of players have emerged in the last few years.
  • The move could also be a push to increase adoption by banking on UPI’s large user base.

The problem of MDR

  • It is not clear how the Merchant Discount Rate (MDR) will be applied to UPI transactions done through credit cards.
    • The MDR is a fee that a merchant is charged by their issuing bank for accepting payments from their customers via credit and debit cards.
  • According to a norm that has been in effect since January 2020, UPI and RuPay attract zero-MDR, meaning that no charges are applied to these transactions, which is a key reason behind the prolific adoption of UPI both by users and merchants.
  • Applicability of zero-MDR on UPI could also be a reason why other card networks such as Visa and Mastercard may not have been onboarded to UPI for credit cards yet.

Sources:

Keywords: Credit card to UPI linking, credit card, UPI, Financial Inclusion, economy, GS Paper 3
News Snapshot

QS World University Rankings