Credit Cards on UPI: How It Works and Is It a Good Idea to Use in 2025?
In India’s rapidly evolving digital payment landscape, the integration of credit cards with Unified Payments Interface (UPI) has emerged as a game-changer. Since the Reserve Bank of India (RBI) permitted linking RuPay credit cards to UPI in June 2022, platforms like Google Pay, PhonePe, and Paytm have enabled seamless transactions without carrying physical cards.
As of 2025, UPI handles over 8 billion transactions monthly, and credit card integration is gaining traction, with 10% of UPI transactions now linked to credit cards. Yet, many Indian users remain unaware or confused about how to use this feature and whether it’s a smart financial move.
This article provides a step-by-step guide to linking a RuPay credit card to UPI apps, outlines the benefits like convenience and rewards, and highlights pitfalls such as overspending risks and restricted transactions. With verified data and insights, we’ll help you decide if this fintech innovation suits your needs in 2025.
What Is Credit Card on UPI?
UPI, developed by the National Payments Corporation of India (NPCI), allows instant bank-to-bank transfers via mobile apps. Traditionally linked to savings accounts, UPI now supports RuPay credit cards, enabling users to pay merchants by scanning QR codes using borrowed funds. Introduced in 2022, this feature is exclusive to RuPay cards (issued by banks like SBI, HDFC, ICICI, and Axis) due to NPCI’s infrastructure.
In 2025, over 20 banks support this, with 5 million RuPay credit cards linked to UPI apps. It combines UPI’s speed with credit card benefits, but requires careful use to avoid debt traps.
Step-by-Step Guide to Linking RuPay Credit Card to UPI Apps
Linking a RuPay credit card to UPI apps is straightforward. Below are verified steps for Google Pay, PhonePe, and Paytm, based on official sources and user guides.
Google Pay
Open App: Launch Google Pay on your smartphone (download from Google Play Store if needed).
Access Profile: Tap your profile picture in the top-right corner to enter account settings.
Select Payment Method: Choose “Set up payment method” and select “RuPay credit card.”
Choose Bank: Pick your card-issuing bank (e.g., SBI, HDFC) from the list.
Enter Card Details: Input the last six digits of your RuPay credit card, expiry date, and CVV.
Verify with OTP: Enter the one-time password sent to your registered mobile number.
Set UPI PIN: Create a 4- or 6-digit UPI PIN for secure transactions. If you have an existing PIN, use it; if forgotten, reset via “Forgot PIN.”
PhonePe
Open App: Launch PhonePe (available on Google Play or App Store).
Go to Profile: Tap your profile picture in the top-left corner.
Add Payment Method: Navigate to “Payment Methods” and select “RuPay Credit Card.”
Select Bank: Choose your card-issuing bank from the list.
Enter Details: Provide the last six digits of your card and expiry date.
Verify OTP: Enter the OTP sent to your registered number.
Set UPI PIN: Create or confirm a UPI PIN to finalize linking.
Confirm: Tap “Proceed to Add” to complete the process.
Paytm
Open App: Launch Paytm and tap your profile picture in the top-left corner.
Access Payment Settings: Select “Payment Settings” from the menu.
Choose Saved Cards: Tap “Saved Cards” and select “Add New Card.”
Enter Card Details: Input your RuPay credit card number, expiry date, and CVV. Check “Save this card for future payments.”
Authentication Charge: Paytm deducts ₹1 (refunded within 48 hours) to verify the card.
Confirm Transaction: Verify a ₹2 transaction (if prompted) to activate the card.
Complete Setup: Once verified, your card is linked for UPI payments.
Note: Ensure your mobile number is linked to both the bank and UPI app. Not all banks support RuPay-on-UPI; check with your issuer (e.g., Axis, HDFC, SBI). If issues arise (e.g., invalid OTP), verify card details or contact your bank via http://www.digisaathi.info
Benefits of Using Credit Cards on UPI
Integrating RuPay credit cards with UPI offers several advantages, making it attractive for Indian consumers in 2025.
Convenience: Pay at millions of UPI-enabled merchants, including small vendors without POS terminals (e.g., roadside shops), by scanning QR codes. No need to carry physical cards, reducing loss risks.
Reward Points on UPI Spends: Earn credit card rewards (e.g., 1-5% cashback or points) on UPI transactions, unlike debit-linked UPI. For example, SBI RuPay cards offer 2% cashback on merchant payments.
Small Credit Access: Use your credit limit (e.g., ₹10,000-₹5 lakh) for daily spends when bank balances are low, ideal for emergencies or cash flow gaps.
Secure Transactions: UPI’s multi-factor authentication (biometrics, UPI PIN) minimizes fraud. NPCI reports fraud rates below 0.1% for UPI transactions in 2025.
Widespread Acceptance: Over 50 million merchants accept UPI, compared to 10 million POS terminals, expanding credit card usability.
These benefits streamline payments and enhance rewards, especially for frequent UPI users averaging 30 transactions monthly.
Potential Pitfalls of Credit Cards on UPI
While appealing, this feature has risks that require financial discipline.
Risk of Overspending: UPI’s ease can lead to impulsive purchases, depleting credit limits. In 2025, 20% of credit card users reported exceeding budgets due to UPI convenience. Without tracking, users risk debt accumulation.
Interest Charges: Unpaid balances incur high interest (36-45% annually), far exceeding savings account rates (~4%). For example, a ₹10,000 unpaid bill at 40% interest adds ₹4,000 yearly if not cleared within the 45-50 day interest-free period.
Merchant Fees: Some merchants charge 1-1.1% fees (plus GST) for RuPay credit card UPI payments, reducing cost-effectiveness.
Limited Transactions: Certain transactions are restricted
Peer-to-Peer Transfers: Sending money to individuals via UPI is not allowed with credit cards.
Non-Merchant Payments: Payments like taxes, utility bills, or government fees may be excluded by some banks.
Merchant Restrictions: Some QR codes don’t accept credit card UPI due to merchant policies or high MDR (Merchant Discount Rate, 1.5%).
Credit Limit Constraints: Banks set UPI transaction limits (e.g., ₹1 lakh/day) based on credit card limits, which may restrict large purchases.
Is It a Good Idea to Use Credit Cards on UPI?
Using a RuPay credit card on UPI can be beneficial if managed wisely. It’s ideal for:
Frequent UPI Users: Those making regular merchant payments (e.g., groceries, dining) can maximize rewards without carrying cards.
Disciplined Spenders: Paying bills in full within the interest-free period avoids high interest, leveraging rewards and credit access.
Small Business Owners: UPI’s reach helps manage small transactions when cash flow is tight.
However, it’s risky for
Impulsive Spenders: Easy access may lead to overspending, especially without budgeting.
Low Credit Limit Holders: Small limits (e.g., ₹10,000) restrict utility, and fees erode benefits.
Non-Merchant Users: Limited to merchant QR codes, reducing versatility.
To mitigate risks, set spending limits via banking apps, track spends, and pay balances monthly. For example, a ₹5,000 grocery bill earning 2% cashback yields ₹100, but late payments could cost ₹200 in interest.
Final Words: Use with Caution
Credit cards on UPI offer unmatched convenience and rewards, aligning with India’s cashless push in 2025. With platforms like Google Pay, PhonePe, and Paytm simplifying access, it’s a powerful tool for disciplined users. However, the risks of overspending and high interest demand vigilance. Beginners should start with low-value transactions, monitor budgets, and avoid restricted payments like P2P transfers. For financially savvy users, it’s a smart addition to digital wallets; for others, sticking to debit-linked UPI may be safer. Always check bank terms and consult advisors for personalized advice.
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