What is Credit Card, Debit Card & UPI – Understand Differences | AU Small Finance Bank
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Differences between Credit Card, Debit Card & UPI

    Payment modes such as Debit Card, Credit Card and Unified Payments Interface (UPI) are becoming popular alternatives to cash payments in India. All these types of payment modes can be used to make instant online transactions, but each one of them work differently. Let us first understand what is Debit Card, Credit Card and UPI and then we will look for the differences between all the three financial instruments.
     

    What is Debit Card?

    A Debit Card is issued by a Bank against your Savings Account. For instance, if you open a Savings Account with us, you will automatically be eligible for an AU Bank Debit Card. You can use the card for online shopping or swipe it at a POS machine, or for withdrawal of cash from an ATM. POS and cash withdrawal transactions require you to enter the PIN, after which the amount gets debited from your linked Bank Account. For online shopping, customer needs to enter OTP (One Time Password) to authenticate the transaction which they receive on their registered email id and phone number. Post authentication, amount gets debited from their Savings Account. Every payment detail is received via SMS or email. Apply for Debit Card with us to reap multiple benefits.

     

    What is Credit Card?

    A Credit Card is a line of credit that you can avail from a bank. This facility gives you access to instant credit, and it can be extremely useful for some planned/unplanned expenses. Credit Cards come with a pre-defined credit limit, which differs for every user. You can use this credit limit for online and offline purchases. It also comes with a wide range of benefits like Cashback, Reward Points, Lounge Access, Complimentary Protection Plan, 48 days Credit-Free Period etc.

    For making payment through Credit Cards you need to enter the pin for offline transactions and OTP (One Time Password) for online transactions to authenticate. Once verified, the amount will be deducted from your assigned limit/pending balance. It’s important to note - you are required to pay the amount spent through the Credit Card on or before the payment due date to avoid late fee charges.

    We offer a range of Credit Cards to suit the needs of every customer. Apply for Credit Card with us.

     

    What is UPI?

    Unified Payment Interface (UPI) is a popular online payment mode that allows users to link multiple bank accounts in a single smartphone app and do day to day transactions.

    One doesn’t have to remember too many details to carry out transactions as UPI has made the money transfer process a lot easier. Users just have to use a virtual address called as Virtual Payment Address or popularly known as UPI ID. The UPI ID is set by providing the details of your bank account on the app. The app will send an OTP for verification on the registered mobile number. Once done, you are ready to send and receive money.

     

    Differences between Debit Card, Credit Card & UPI

    Particulars
    Debit Card
    Credit Card
    UPI App
    Usage
    Can be used at all merchant outlets and online websites/apps
    Can be used at all merchant outlets and online websites/apps
    Can be used at merchant outlets having QR code, online website/apps having UPI integration with Payment Gateway or to send money to mobile number/UPI handle
    PIN
    Needs to be set to activate and transact. Set PIN here.
    Needs to be set as an authentication factor for activation and transaction use. Set/Reset PIN here.
    Needs to be set at the time of UPI handle creation as an authentication factor
    ECOM transactions
    Disabled by default as per RBI guidelines. Can be enabled here.
    Disabled by default as per RBI guidelines. Can be enabled here.
    UPI as an option can be selected at checkout and payment can be done at checkout with PIN
    Contactless Transaction (TAP&PAY)
    Available up to INR 5,000. Disabled by default as per RBI regulations. Can be enabled here.
    Available up to INR 5,000. Disabled by default as per RBI regulations. Can be enabled here.
    Not possible using UPI
    Credit limit
    No credit limit for Debit Cards as it linked to Bank Account
    Credit limit calculated basis income and other criterias for Credit Cards and can be adjusted in card controls
    No credit limit for UPI as it is linked to Bank Account
    Cash withdrawal
    You can easily withdraw cash whenever you want from an ATM
    You can withdraw cash using your credit card, but it would attract processing charges and interest charges on amount withdrawn
    There is no facility for cash withdrawal with UPI yet
    Interest
    No interest is charged as amount utlized is from your own account
    Interest is chargeable if used amount is not repaid on or before payment due date
    No interest is charged as amount utilized is from your own account
    Security
    Card protection plans to protect against fraud may be bundled or can be purchased separately; do not reveal your PIN to anyone; card blocking option in card controls available to prevent misuse of card
    Card protection plans to protect against fraud may be bundled or can be purchased separately; do not reveal your PIN to anyone; card blocking option in card controls available to prevent misuse of card
    Do not reveal your PIN to anyone to protect yourself from fraud, double check amount being paid, beneficiary details before approving transaction
    Privileges
    Comes with privileges such as Discounts, Cashbacks, Reward Points and other offers
    Comes with privileges such as Discounts, Cashbacks, Reward Points and other offers
    Some UPI apps may offer Cashback on first transaction/repeat purchase
    Credit checks
    No impact on credit bureau score for issuing a Debit Card
    Financial institutions have different credit bureau score cut off for issuing a Credit Card. Defaulting on payment of outstanding amount may impact credit bureau score.
    Credit bureau score not checked for UPI handle creation
     

    Tips for selecting the right payment mode

    Now that you know the difference between Debit Card, Credit Card and UPI, the question arises, which is the right mode of payment?

    Well, that depends on different scenarios. At times when you don’t have cash while you travel or do grocery shopping, payment via UPI by scanning the code can be very useful. Credit Cards can be extremely useful when you want to meet any emergency or buy anything expensive. Credit Card gives you credit free period, ease of transaction, a chance to get redeemable Reward Points or Cashback and a host of value added lifestyle benefits. However, you need to be cautious with your spending. On the other hand, Debit Cards should always be kept handy whenever you want instant access to your cash.