Users can already use debit cards and bank accounts with their UPI. Soon, they’ll be able to link credit cards too. This will give users better access to credit, which can help them manage their finances and improve their lives. It will also give sellers better ways to reach customers and generate higher profits.

RBI, in its recent notification, has approved the linking of credit cards to UPI accounts. This is expected to be implemented in different phases. The first phase would allow users to link their credit cards issued from RuPay platforms to their UPI accounts. 

In the near future, you will be able to link your credit card account with UPI and make payments at UPI-enabled merchant QR codes without having to physically carry your credit cards.

The UPI platform now has over 260 million (26 crore) unique users and 5 crore businesses, according to RBI data. UPI processed 594.63 crore transactions worth Rs 10.40 lakh crore in May 2022.

Also Read: How UPI on credit cards can help you improve your credit score

What Are The Advantages Of Using UPI Platform For Payments?

  • One of the major advantages of using the UPI platform for payments is its widespread acceptability. Almost every digital platform in the country accepts UPI payments, which makes it easy for users to use. It also offers fraud protection, which is a big advantage for users.
  • Unlike cash and card, which are only accepted by a handful of establishments, UPI is accepted by millions of merchants and service providers. This means that, in most cases, you won’t have to carry a physical card or cash, instead, you can just use your mobile phone to make payments. This makes payments faster and easier.
  • Users can use any UPI-enabled wallet or app to make payments. This makes it much easier to use than other payment options such as cash or card. This also helps build a larger ecosystem for businesses to accept payments and build their reputation.
  • Users can use their debit cards, bank accounts, and even their mobile phones to make payments through the UPI platform. This means that regardless of the mode of payment, users will be able to make payments through the UPI platform. This makes the payments platform extremely accessible and allows users to pay from anywhere.
  • With better management of their credit cards, users have the opportunity to improve their credit score as well. This is a great way for users suffering from low credit scores to achieve better scores. 
  • To make payments via UPI, you must have a mobile app that supports UPI. When you link your bank account and enable one-time authentication for PIN setup with a debit card, a one-time password is sent to your registered mobile number.
  • Each time you make a payment, simply scan the QR code, select your bank account, and confirm with your PIN, eliminating the need to carry your debit or ATM card.
  • While it is not as simple as with credit cards, you must currently carry your credit card, swipe it on a PoS machine, enter your PIN, and complete the transaction.
  • Accepting credit card and debit card swipe payments necessitates the purchase of a PoS machine, which is not cheap. Accepting payments necessitates MDR as well as a T+2 or prolonged settlement duration.   
  • According to research conducted jointly by PhonePe and the Boston Consulting Group, UPI accounted for more than 60% of all non-cash transactions in FY22. PoS transactions, on the other hand, made up only 5% of all transactions. As a result, it is clear that if properly implemented, this initiative has the potential to significantly increase credit card acceptance and adoption.

Credit On UPI - A New-Age Concept? 

Credit on UPI is not a novel idea; a few FinTech companies, such as LazyPay, Jupiter Edge, and Freo Pay, allow their customers to pay with credit at any UPI-approved merchant QR code.

They offer a low credit limit and a free repayment period of up to 30 days. PostPe by BharatPe is a similar platform that allows customers to pay with their credit limit to any of their partnered businesses.

UPI's popularity stems from its ease of use. Users can now link their credit cards to UPI, allowing for even more widespread adoption of quick and easy payments for minor transactions without the need for a PoS.

Furthermore, while using a credit card has benefits such as reward points on purchases and a credit-free period of up to 45 days, it can also result in up to 48% annual interest on the outstanding balance if not managed properly.

Also Read: Making UPI Payments Via Credit & Debit Cards

Challenges That Need Answers While Linking Credit Cards With UPI

  • Although this is an intriguing beginning, there are some issues that need to be resolved first -
  • Vendors prefer UPI payments because there is no fee. However, it is unclear how credit card companies will recoup their capital expenses and how the current infrastructure will support this if credit cards are accepted through UPI Payments.
  • More importantly, credit cards are a type of soft loan or short-term debt that should be handled with caution. Credit rotation and additional debt reinvestment in investing, trading, and so on are possibilities.
  • The ease of payments may encourage consumer overspending and put many people in a debt trap as it can significantly increase UPI volumes and average order amounts, which are significantly higher for credit cards than for UPI.
  • A four or six-digit PIN is required for all UPI transactions, whereas credit cards require a PIN for offline POS and an OTP for online purchases. Payment authentication is unknown, which could lead to an increase in fraud cases if appropriate infrastructure and rules are not in place.
  • Since the integration is being steered out to RuPay, India's domestic payment method, it will be interesting to see if this gives RuPay a competitive advantage over foreign competitors such as Visa and Mastercard, as well as if this increases RuPay's market share.


Linking credit cards with UPI is the next step in revolutionizing digital payments. Users are eagerly awaiting the roll-out for all credit card providers so that they can shop wherever and however they want. 

FAQs of Linking Credit Cards To UPI – Understanding Impact & Benefits

1. What is UPI?

Universal Payments Interface (UPI) is an open platform that allows users to make instant payments and transfers using their bank accounts, mobile phones, and other digital wallets. 

2. Which are the popular UPI payment apps in India? 

Google Pay, Paytm, PhonePe, and Amazon Pay are the most popular UPI payments apps in India. 

3. How does UPI work? 

A UPI app is installed on the user's phone. Once a UPI app is installed, a user can make payments using a UPI app by linking their bank account, mobile phone number, or other digital wallet. A UPI app will then transfer the amount from the user's bank account, digital wallet, or other source to the merchant’s bank account. 

4. Is it a good idea to link credit cards to UPI apps?

It is generally a good idea to link your credit cards to UPI apps, as this will allow you to make quick and easy payments using your credit card without having to wait for your PoS to be processed. UPI apps are also much faster than PoS, as payments are processed almost instantly using your credit card. 

5. Is it safe to use credit cards with UPI apps?

UPI is a secure platform, and your credit card information is encrypted when it is sent to your UPI app. Your credit card information is also not shared with the merchant, and only the final bank account information is shared.