RBI plans to connect credit cards to UPI may benefit fintechs

Reserve Bank of India

The Reserve Bank of India plans to connect credit cards to UPI with the help of fintech companies like Paytm, according to Citi and Goldman Sachs.

Analysts at both brokerages agreed that the move will be crucial for Paytm and other fintech businesses, since they will be able to monetize UPI payments and make more money.

In June 2022, the RBI recommended attaching RuPay credit cards to the UPI, claiming that it has become the country’s “most inclusive means of payment” and that the move is intended to broaden the reach of the UPI.

Goldman Sachs indicated in a June 10, 2022 note that the central bank’s action will “positively influence” fintech firms like Paytm and perhaps enhance credit card use in the nation.

“In our view, this could potentially increase credit card penetration and expand the scope of digital payments in India, positively impacting both card companies (such as SBI Cards) and fintech platforms (such as Paytm),” reported ANI citing Goldman Sachs report.

Citi, another major brokerage business, stated that the change from debit/bank accounts to credit cards may boost the monetisation of UPI payments, which will benefit Paytm and other fintech platforms.

According to the brokerage business, it appears that all of the latest digital payment criteria are either helpful to Paytm or will have no influence on the company’s operations. Several worldwide brokerages continue to be optimistic on Paytm shares, noting the company’s quick revenue growth, expedited loss reduction, and significant increase in contribution margin.

Also Read | Banks may increase liquidity by drawing down on CRR: RBI Governor Das

According to Goldman Sachs, limits on digital lending are unlikely to have an influence on Paytm’s operations, but will assist to make the company more appealing. In August, the RBI issued digital lending guidelines to enable the orderly rise of credit delivery through digital lending while minimising regulatory issues and protecting clients.

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