In a latest development, NCPI has directed all banks issuing RuPay credit cards to ensure that the reward points and other specified benefits are not lower for RuPay credit cards on UPI transactions and RuPay credit cards.
Giving An Equal Opportunity
Notably, this directive by the National Payments Corporation of India (NPCI) is effective from September 1, 2024.
Further NPCI in a circular dated August 5, 2024 said, “Credit card rewards points are a key lever to drive spending on credit cards. It has been observed that the reward points, benefits and features for RuPay credit cards on UPI transactions are not equivalent to the rewards points, benefits and features offered on card transactions. Issuers shall ensure that the reward points, benefits, features and other ancillary offers should not be lower (directly and indirectly) for RuPay Credit cards on UPI transactions and RuPay credit cards, except for tr .. for transactions where the issuer does not earn any interchange fee.”
While explaining the interchange means, Mehul Mistry, Global Head of Strategy, Digital Financial Services & Partnerships, Wibmo, a PayU company said, “Interchange is the fee that a card issuer gets when the customer uses the payment instrument for making payment at a merchant location. In case of Rupay Credit Card on UPI interchange is 1.5%. Issuers don’t earn interchange on transactions where there is no merchant discount rate (MDR) and the value of transaction is below Rs 2000 for small merchants.”
More Attractive Offer
The consumers using RuPay credit cards on UPI may benefit from additional reward points for transactions that involve interchange fees, according to the experts.
The COO, TechFini, Atish Shelar said,”When interchange fees are applied to certain transactions, issuers have the opportunity to allocate more resources toward their rewards programs. This increased funding can lead to more generous rewards, such as additional reward points or enhanced benefits, for consumers. As a result, consumers may find it more attractive to use their RuPay credit cards for UPI transactions, as the increased rewards can make their spending more rewarding. This will benefit both the cardholders with more substantial rewards and the issuers with increased transaction volumes.”
According to the co-founder, Card Insider, Ankur Mittal said, “Every bank offers a different reward rate for UPI transactions made with a RuPay credit card. These rewards are often lower than one received on non-UPI spends. The new directive issued by NPCI on rewards parity would ensure that those with a RuPay credit card would receive the same rewards for UPI transactions as for non-UPI transactions, thereby making UPI payments more rewarding.”
