Falling cashback on UPI payments – Credit card linking opens a door

• Cashback offers by paying through UPI apps have reduced considerably and are often for specific periods or linked to specific merchants.
  
• Linking credit cards to UPI opens up the possibility of earning rewards on transactions.
  
• Whether for everyday purchases or significant transactions, users can accumulate reward points and earn cashbacks.
  

When UPI or United Payment Interface was in its earlier days, companies would give huge cashbacks to win over customers. People would get cashback of even a few hundred rupees to make payments on Google Pay. Other players like Paytm also had similar cashback offers. However, that is not the case now. The amount of cashbacks have reduced significantly, as expected.

But since we spend a lot through UPI, is there still some way to get cashbacks on UPI spends?

Many banks and payment service providers (PSP) apps offer cashback incentives to encourage UPI transactions through their app.

“Firstly, frequent usage of UPI for payments, including bills, online shopping, and peer-to-peer transfers, often unlocks cashback rewards. Additionally, some platforms provide special promotions or discounts when using UPI during specific periods or for specific merchants,” says Sachin Castelino, chief strategy and transformation officer, In-Solutions Global, a fintech services company.

For example, Paytm and Amazon Pay launched such offers during summer for a specific period but the amount of cashback was limited to small amounts or only once per customer.

Account holders of the newly launched "DCB Happy Savings Account" can enjoy cashback rewards on qualifying domestic UPI debit transactions, with potential incentives up to ₹7,500 annually.

Referral programs are another avenue; referring friends to use UPI can result in cashback benefits for both the referrer and the new user. Lastly, some financial institutions collaborate with merchants to offer exclusive UPI cashback deals.

However, such offers are few and far between.

Link your credit card to UPI to avail cashback

However, there is a way you can pay through UPI and earn cashback and rewards. You can apply for a RuPay credit card through one of its partner banks, and then link it to a payment app like Google Pay or Paytm. Currently Mastercard and Visa credit cards cannot be linked to UPI.

“Linking credit cards to UPI opens up the possibility of earning rewards on transactions, compared to debit cards/savings accounts as the latter typically lacks rewards programmes,” says Mohit Bedi, Co-founder, Kiwi, a fintech startup.

“The linking not only streamlines payments but also encourages users to prefer credit cards for UPI transactions, establishing a mutually beneficial relationship between consumers and financial institutions,” says Castelino.

Whether for everyday purchases or significant transactions, users can accumulate reward points and earn cashbacks according to their credit card reward programs, elevating the overall payment experience.

This way you can earn cashbacks and rewards each time you make a UPI payment. However, remember that linking your credit card to UPI comes with the risk of overspending through impulsive purchases, as you would need to pay your credit card bill on time to avoid any late penalties and high interest charges.