UPI has become millions’ preferred instant, round-the-clock payment interface owing to its simplicity. In a significant move, credit card providers have also started enabling direct integration with UPI, allowing cardholders seamless settlements through UPI rails and leveraging its widespread merchant acceptance. However, along with advantages, this linkage also attracts some risks to weigh. Let us delve deeper.
Pros of linking your credit card with UPI
1. 24×7 Settlements
UPI integration enables the use of credit cards for payments round the clock, overcoming limitations of odd transaction hours or unavailability of card machines at merchant outlets. UPI’s existing QR code acceptance bridges the gap very well.
2. Real-Time Bill Payments
Instead of longer settlement cycles via gateways, credit card holders can pay outstanding bills instantly via directly linked UPI apps/accounts. This aids in improving creditworthiness faster. The ease of instant settlements prevents a backlog of overdue, helping maintain optimal credit utilization levels – a key parameter impacting credit rating.
3. Mitigation Against Payment Failures
Temporary insufficient account balance or exceeding credit limits will no longer lead to embarrassment or transaction failures. The directly accessible UPI wallet is linked to serve as a buffer to ensure the continuity of credit card settlements.
4. Ubiquitous Acceptance
Integration with UPI payments allows credit card holders to tap into UPI’s vast merchant acceptance across offline retail outlets via QR codes. This brings unmatched convenience for out-of-hours usage.
Cons of linking your credit card with UPI
No Friction to Delay Consideration
Unlike bank transfer limits or cash constraints earlier, which forced more thoughtful purchase decisions, unlimited UPI rail capacity removes vital delays and friction, preventing impulsive overuse of credit.
Difficult Reversal Once Overspent
Compared to over-drafting bank accounts, exceeding credit limits poses higher financial risks since interest charges start compounding immediately with less flexibility around reversals or installment conversions.
Heightened Impact of Payment Frauds
Outsized Damage If Unchecked
In worst-case events like loss of wallet or hacking of phones, criminals gaining access to both credit cards now directly linked to UPI balance can inflict disproportionate financial damage within minutes if victims cannot urgently block facilities.
Faster Mitigation Needed
While the UPI PIN requirement before transfers adds a vital layer of security preventing misuse, the enormously expanded spending capacity warrants extra vigilance. Quick mitigation of unauthorized transactions is strongly advised through instant blocks.
The Bottom Line
While the integration offers some breakthrough conveniences, prudent self-discipline is vital. This is why IDFC First Bank equips customers with real-time spending monitoring and personalized alerts to enable responsible usage along with the strengths of UPI-linked credit card payments. IDFC First also provides instant blocks and dedicated assistance to mitigate fraud risks.
So embrace the synergies of credit and UPI payments with the assurance of security and control only with IDFC First to unlock the next level of flexible settlements. Your ideal payment partner for today’s digital life awaits!
