Is UPI for RUPAY Credit its "WhatsApp Moment" ?
Sanjay Swamy
Always looking to fund amazing entrepreneurs in #Fintech #SaaS #India! Entrepreneur & Early-Stage Fintech Investor!
RBI recently approved the enablement of UPI on RUPAY Credit Cards.
Fact: CreditCards are only available to about 30-40m unique individuals in India - and mostly in metros and tier-1 cities.?
Fact: The rise of UPI for payments has made NPCI the undisputed leader in digital transactions across all walks of consumers (>> 500M) and all types of merchants (10’s of millions, online and offline).
Fact: RUPAY credit cards are a late entrant to the credit-card scene in India.?
Fact: RUPAY credit cards can now be enabled on UPI Payments - vide recent RBI circular - and other cards cannot.
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Question
Can NPCI come up with a process to mass enable the issuance of RUPAY credit cards?
There is certainly a window of opportunity for NPCI to grab the opportunity and become the defacto credit card issuer in the country, and enable UPI on RUPAY - in a moment not too different from what was named the “WhatsApp moment of Payments” when UPI was launched in 2016.
Here’s how it could work.
Voila - NPCI now suddenly has the ability to instantly onboard the millions of users who already have credit cards on their platform and issue RUPAY Credit Cards. Previously whetted consumers get the immediate benefit of Credit on UPI. Simple - no?
Well - there’s still one gotcha - what about the transaction fees and cost of credit? That still needs to be resolved - and therein lies the crux of the matter. How can this be done?
Charging the merchant seems like a logical thing to do -?but it's fraught with issues, the least of which are KYC, onboarding, fraud, etc. My view is simple - charge the consumer x% - they are after all getting the benefit of the short-term credit and using it on UPI. Plus its easily done electronically between the bank and its existing customer. Alternately, 100 rupees per month, 1000 rupees per year might just fly.
I know I would pay it - would you?
What do you think? Can this be Breakout Moment for RUPAY Credit Cards??
Comments welcome.
CEO - Perfios Account Aggregation Services (P) Ltd.
2 年I use credit cards when there is a delivery risk or where I may cancel the purchase - for example rescheduling a trip. I'd rather use the free credit period without locking up my funds. For me a credit card is a billing, recon, and payment method, not a borrowing tool. I need to be sure that the dispute resolution mechanism is robust - which appears to be WIP on the UPI network. So thanks, but not yet. Rather than call it a credit card and invoke all its baggage, why not simply enable OD at scale for qualified consumers at a reasonable cost of say 1% of availed credit beyond X days? PS: As an investor, would you still back a BNPL startup?
AI, CTO, Digital Innovation, Speaker
2 年A flat MDR to be charged to consumer (5 - 10, based on value charged). Make it simple by integrating this into the PIN popup. This will make it possible for all existing acceptance points to immediately accept UPI in credit. ie. the choice of funds is by customer.. the merchant should not bear the cost of that choice. A customer should be able to pay the CC using the ame UPI id. Refunds to the card should work the same way. Bring some category codes for merchants when accepting UPI, allowing the possibility to add gratuities for certain merchants - this can be enabled by the accepting merchant, and integrated into the PIN popup. UPI credit should support xx day free credit at a transaction level - ie no monthly billing cycles. Each transaction gets xx days of credit, customer gets credit limit visibility, and outstanding amount visibility, beyond xx days the transaction accrues interest. This will go a long way into getting credit into the hands of a lot more people in the country.
International Expansion| Digital Transformation,CeX |Mobile Payments & Fintech |Partnerships-Telco,Merchants | Analytics
2 年Card networks like visa , mastercard were already getting beaten up with UPI as they being outside the ecosystem. With credit cards on UPI , it's like using th credit limit on your card and do all transactions using UPI . The card networks will be burning hot this time. And the use case you mentioned Sanjay Swamy [We Are Hiring All Levels and Roles] if using an existing credit card limit over a virtual RUPAY card then the issuer bank will hardly make any MDR. Very interesting to see how this evolves!!
Author of Generation Hope: How Inclusive Economics Can Help Us All Thrive | Fintech Visionary | Impact-Driven Entrepreneur
2 年Sanjay why would you pay Rs 1,000 per year for a credit facility you don’t need? It doesn’t make it any more convenient given you can already pay via UPI using debit. There are typically two types of credit cards users (1) those who use them for points, which comes from the merchant service fees and (2) those who need credit. IMO, the latter would pay because there is a clear benefit, but the former are unlikely to.