Why Credit on UPI Struggles to Gain Momentum: Unveiling the Challenges
Despite the initial promise, credit transactions on the Unified Payments Interface (UPI) have not gained significant traction. The slow adoption can be attributed to several key factors outlined in a recent article.
Understanding Why Credit on UPI Lags Behind:
One major obstacle is the absence of a defined interchange fee structure for credit on UPI. This lack of clarity creates uncertainty among banks and hinders their willingness to participate fully. Additionally, concerns about possible cannibalization of credit card balances by larger banks have further impeded widespread acceptance.
Another deterrent is the imposition of fees, such as the merchant discount rate (MDR), on merchants for credit transactions. Many merchants, accustomed to free UPI payments through bank accounts, sho...