Technology for MSMEs: The Reserve Bank of India’s proposal to link UPI to RuPay credit cards will enable the adoption of UPI in enterprises with multiple use cases for merchants like overdraft facilities, capture facility and retainer and billing support, the central bank said in its August bulletin. The link is expected to give a boost to person-to-merchant (P2M) UPI transactions which stood at Rs 769 per transaction in July 2022. The move would also contribute to the growing share of P2M transactions in total UPI transactions, a said the RBI.
“Currently, over 26 crore unique users and 5 crore merchants are on the UPI platform,” RBI Governor Shaktikanta Das had said when announcing the regulatory decision in June. According to data from the National Payments Corporation of India (NPCI), 628.8 crore of transactions amounting to nearly Rs 10.63 lakh crore were processed through UPI in July 2022, of which 299.9 crore were P2M transactions amounting to Rs 2.30 lakh crore. For the period a year ago (July 2021), 324.7 crore UPI transactions involving Rs 6.06 lakh crore were processed, of which 125.7 crore transactions were P2M amounting to Rs 99,597 crore.
Fintechs also echoed RBI’s view that the link would attract more traders to the platform. “Many merchants today do not have point-of-sale (PoS) terminals for credit cards, especially in semi-urban and rural areas, but all have UPI QR code-based acceptance. All of these merchants will be able to accept credit payments through UPI,” said Mandar Agashe, founder and CEO of payment solutions company Sarvatra Technologies.
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The link will further increase UPI usage, even for big tickets, as users can have a balanced option to choose how they can pay. “Thus, it will expand India’s digital payments footprint, strengthen card network merchant partnerships starting with local payment system RuPay and eventually other international players like Visa and Mastercard to enhance the payment experience of customers,” said Muralidharan Srinivasan, Head of Payments. , APMEA Region, FIS. The company provides technology solutions to merchants, banks and capital markets firms worldwide.
In fact, the digital merchant payments space is set to drive the next wave of disruption in the overall payments ecosystem, as 75% of merchants are now covered via QR and also thanks to greater penetration and UPI activation of credit cards, according to a report by BCG and Matrix Partners India last week.
Meanwhile, the newsletter also noted the “need to provide rapid and transparent credit to the agriculture and MSME sectors”. While the RBI is committed to encouraging initiatives in areas such as MSME lending through its regulatory sandbox, other stakeholders such as banks and fintech companies are also collaborating to provide a delivery mechanism. digital credit in a cost-effective and hassle-free way, the central bank said. .
The flow of credit to the MSME sector has remained buoyant over the past few months. According to the latest SIDBI-TransUnion CIBIL MSME Pulse report, total credit disbursements to MSMEs increased by approximately 43% in the fourth quarter of FY22 compared to the prior year period. While bank credit to medium industries increased by 47.6% in June 2022, after growing 59% a year ago, credit growth to micro and small industries accelerated to 29.6% in June 2022, compared to 11.6% in June 2021.
Also Read: Rapid Explosion of Digital Merchant Payments (P2M) to Disrupt Payments Landscape: Report