1.2% Interchange For Credit Line On UPI, Likely To Be Fixed By NPCI
Updated: 28-01-2025 at 6:25 AM
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United Payment Interface or UPI has become the backbone of the payment mechanisms in India. A huge chunk of the Indian population is completely reliant on the use of technology for the purpose of engaging in transactions.
Recently, The National Payments Corporation of India (NPCI) is reportedly planning to impose a 1.2% interchange charge for credit lines on UPIs. The credit users receive a portion of commission from merchants for every transaction made.
About 90% of the interchange consists of Merchant Discount Rate (MDR), which the merchants pay to banks for facilitating such credit transactions. The credit issuing authority keeps the majority portion of this ‘interchange’. Other stakeholders such as customer bank accounts, NPCI, Card Networks, merchant banks and others get portions from this interchange as well.
Reportedly, negotiations regarding the percentage share of every entity in the ‘interchange’ is currently being discussed and negotiated. Sources report that the official circular in this regard could be released by end of July 2024.
The credit line facility in UPI was introduced in 2023, however, restructuring and reforms are still underway. While some experimentation in this regard has been done with RuPay Cards, more facilities are being sought to be provided. Let us have a look at the intricacies involved in the process
What Is The Credit Line Facility In UPI?
The conventional modes of using cash or cards are slowly being replaced by interfaces such as UPI, which can be found at a one-stop-shop, your mobile phone. With increasing dependency on such interfaces, the regulatory and development bodies in the finance structure have also considered facilitating credit through them.
It is a pre-approved credit limit offered to UPI users to facilitate seamless and hassle-free transactions in case of low bank balance, or any other related inconvenience. The users can access this facility through their UPI apps such as Google Pay, Phonepe, etc. through their bank accounts. Merchants pay this amount to Credit issuers.
The financial credibility of a Credit Line seeker is analysed and verified by the Bank before sanctioning such a facility. Details such as income, eligibility, credit score, credit repayment history are assessed by banks.
What Are The Benefits Of Availing A Credit Line Facility?
Provision of credit line through UPI is a revolutionary idea in the banking process. It has a bouquet of benefits for its users. Let us have a look at them!
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One-Stop-Shop: Your phone becomes the answer for your every banking need. You can engage in transactions and also avail credit facility from the comfort of your phones. You don’t have to carry credit cards anymore after availing this facility.
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Flexibility: This feature in UPI makes seeking credit flexible. A predetermined credit limit can be sought by users without going through the hassles of going from counter to counter in the bank. It can be used for purchases or making transactions.
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Interest Payment: The users only have to repay the amount that they have used within their credit limit. Since the feature facilitates short-term credit needs, interest repayment is not a botheration.
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Instant Money: Since it is an online facility and barely requires time and effort, it is an instant source of money. This saves a lot of time and effort in emergencies situations where there is an urgent need for money.
Eligibility Criteria For Credit Line In UPI: Who Can Apply?
The eligibility Criteria for availing credit line facility in UPI are pretty basic and simple. Let us see who all are eligible for availing this facility:
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Those aged above 18 years of age.
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The residency should be in India.
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A valid PAN card and Aadhar Card is required.
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Aadhar Card must be linked to Mobile Number.
To avail of this facility and move with the application process, contact your bank right now.
Conclusion
Technology has given ease of doing business to those providing services and the consumers as well. Credit line facility and its availability through UPI platforms is a breakthrough in the e-banking journey. Let us strive for progress and benefits through this government scheme.
For any information on this aspect, contact your bank’s manager or contact NPCI by visiting the ‘Connect with us’ option on their website.
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