A UPI credit card transaction utilizes borrowed money from the users’ credit card issuer, allowing them flexibility in repayment while in a debit card transaction, the amount is directly deducted from the users’ bank account
Linking credit cards to the Unified Payments Interface (UPI) has added more convenience to users by simplifying the process of digital payments and fund transfers. Users are not charged any fees for linking or using credit cards for transactions.
How It Is Different
UPI credit card and debit card transactions differ in several key ways. A UPI credit card transaction uses borrowed money from the user's credit card issuer, giving them flexibility in repayment, whereas a debit card transaction deducts the amount directly from the user's bank account. Notably, if a user has no balance in their account, a payment can still be made using a UPI-linked credit card — something that is not possible with a debit card.
Fees Involved
When linking a credit card to UPI, it is important to understand the fee structure, which can differ from debit card usage. While debit card transactions on UPI platforms are typically free, credit card usage may involve transaction fees levied by the bank or card issuer, which vary depending on the specific card and bank policies. Standard credit card terms also continue to apply — if the balance is not paid in full each month, interest is charged on the outstanding amount. Users should also be mindful of cash advance fees if the credit card is used for ATM withdrawals via UPI.
Be Secure
In terms of security, debit cards are directly tied to the user's bank account, meaning any fraud can affect actual funds. With UPI credit card transactions, the risk of fraud is relatively lower, and fraud protection responsibility may fall under the credit card issuer's policies. However, it remains important to use only trusted UPI apps and to set up a unique UPI PIN to authenticate credit card transactions. Devices should be kept secure and apps kept updated to guard against vulnerabilities. Users should also avoid public or unsecured Wi-Fi networks when making financial transactions, and enable credit card security features such as CVV verification, OTP, and SMS alerts.
UPI has a daily transaction limit of Rs 1 lakh, within which credit cards can be used. If the available credit card limit permits, users can utilise the full amount up to this cap. To avoid overspending, users or their banks can set individual spending limits on the card.
Users should avoid using public or unsecured Wi-Fi networks, and instead always use mobile data or a trusted Wi-Fi connection for making financial transactions. Make payments only to merchants using credit cards on UPI and enable credit card security features like CVV, OTP verification, and SMS alerts to enhance security.
UPI has a daily limit of Rs 1 lakh and within this limit credit cards can be used. If the credit card limit is available for the user, he or she can use the entire card limit.
“However, it's important to be aware of the potential risks. These include possible transaction fees associated with credit card UPI payments and the risk of overspending, which can lead to debt accumulation,” says Kumar.
In order to avoid overspending, the user can set the spending limit, or the bank can set the card limit.