What is a UPI credit card and what are its key features? | Mint

Unified Payments Interface, or UPI, is one of the most convenient ways to carry out a transaction. Merely by scanning a QR code or by entering a few keys into your smartphone, you can transfer the money online.

Alternatively, you can use a credit card that needs to be swiped or touched at a PoS (point of sale) to transfer the money. However, there are a few credit cards which offer the UPI functionality, enabling users to link their UPI app to the credit card, instead of a savings bank account.

Notably, not all credit cards have this facility. Typically, UPI functionality is offered through RuPay credit cards and most of the top banks offer their own version of RuPay credit cards which can be linked to the UPI.

As per the UPI’s website, these banks are Axis Bank, Bank of Baroda, HDFC Bank, ICICI Bank, IDFC First Bank, IndusInd Bank, Kotak Mahindra Bank, PNB, SBI Card, Union Bank and Yes Bank.

UPI credit cards: These are the key features

1. Ease of payments: You can easily scan a QR code and make the payment instead of handing over the credit card or swiping it at a PoS.

2.  Best of both worlds: You can use UPI without linking it to your debit card or the savings bank account. You can use the credit line offered by your bank. This is like getting the best of both worlds.

3. Bank statement: By linking your UPI to credit card, you can keep your bank statement clean instead of cluttering it with all sundry payments of ₹10-20 that you tend to make during the day. 

When you link your credit card to UPI then your bank statement will only show the credit card bill payment whereas your credit card statement will reflect all these sundry payments.

4. Reward points and benefits: Generally credit cards offer reward points and benefits which you accumulate when you make big purchases. But when you start making small UPI payments through your card, you become eligible for these rewards at a faster pace.  

5. Interest-free period: Since a credit card offers upto 45 days of interest-free period, you become eligible for this interest-free period, which frees you from the burden of making payments in the real time.

When did it start?

The Reserve Bank of India (RBI) on April 6, 2023 proposed to expand the scope of the Unified Payments Interface (UPI) by enabling transfer to/from pre-sanctioned credit lines at banks.

It is vital to mention that prior to that, only savings accounts, overdraft accounts, prepaid wallets and debit cards could be linked to UPI.

Following this, RBI on Sept 4, 2023 said that the UPI system will also include pre-sanctioned credit lines issued by banks for transactions.

(Using a credit card carries its own set of risks)