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

.... Show less Show more
News Snapshot

Linking of credit card to UPI

Thu, 9th Jun 2022

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

Thu, 9th Jun 2022