upi: How credit card transactions on UPI will work for businesses

Razorpay is a financial services company that provides online payment and banking solutions. The company claims to provide technology payment solutions to over 8 million businesses. Razorpay has now integrated credit card transactions on UPI for merchants on the platform. The company has also noted that this change is the first-ever move that any player in the industry has ever implemented and it aligns with the National Payments Corporation of India ( NPCI ) and the Reserve Bank of India's ( RBI ) latest advancements in the online transaction space.

As RuPay credit cards get enabled on UPI, Razorpay merchants can start accepting credit card payments on UPI, with minimal changes to their existing setup. Razorpay partnered with Axis bank to implement this change which will serve the "ever-evolving needs of merchants" and will also deliver greater convenience.

How will this new UPI feature help users
Currently, UPI allows customers to make transactions through their bank accounts. With this new feature, users will be able to link their credit cards with their UPI accounts to ensure that they no longer have to carry their credit cards with them at all times for payments.

UPI transactions are becoming more popular as approximately 250 million Indians use UPI for their day-to-day transactions. Moreover, nearly 50 million users have one or more credit cards. The financial regulator's move will not only offer users with seamless payment experience of UPI but will also help them with the benefits of short-term credit and the rewards of cards.

Razorpay has mentioned that customers of HDFC Bank, Punjab National Bank, Union Bank and Indian Bank will be the first ones to access this technology.

Growth of credit cards in India
According to the data provided by RBI, the credit card industry has seen steady growth at the rate of 30% over the past three years. However, the industry remains in the shadows as only 6% of Indians have access to a credit card. Meanwhile, UPI is used by more than 40% of Indians and has recorded over 731 crore transactions in October 2022.

UPI credit card transactions: Reactions
Razorpay's MD & Co-founder, Shashank Kumar has stated that the decision undertaken by the NPCI and RBI is "set to have positive implications for both consumers and merchants". Both businesses and consumers will be able to transact and accept payments via credit cards on UPI.

He also mentioned that the essential factor for this move to bring impact is the readiness of the payment gateway infrastructure. This is Razorpay's first step towards democratising credit card transactions on UPI for its merchants.

Axis bank executive, Sanjeev Moghe has also claimed that Razorpay's move "has the potential to change the way customers make payments in the next 2-3 years."

Meanwhile, Zomato 's VP, Pradyot Ghate has explained that this move combines "the security of credit cards with the ease of UPI." Zomato is one of the businesses that is also a client of Razorpay.

---

Top Comment