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Comment by programmer_dude | Hacker News Reader

This exists in India too. But people don't use it. Why take on debt if you don't need to?

UPI is directly connected to your bank account. It does not go through VISA, Mastercard or whatever.

How does UPI handle payment disputes? My impression is that the direct payment systems do not have chargebacks and are risky for anything that isn't immediate. What do you do if store won't give you return/refund for something broken? What do you if online store never ships? What if food stall doesn't give you your food?

With credit card, it isn't my money for a month until I have to make the payment. If there is a problem, I can chargeback. The possibility of chargeback makes the vendor's support more helpful

In this regard a UPI transaction is the same as a cash transaction. AFAICT it does not handle payment disputes. You can use a credit card if it provides protection against this but now you need to be sure the credit card company is not scamming you (say by charging you bogus fees). As far as I am concerned using a credit card changes nothing when it comes to fraud protection.

> Why take on debt if you don't need to?

what debt?

> UPI is directly connected to your bank account.

oh, then it's a hard pass from me. i do not connect anything to my bank account and keep cards in separate banks for security.

> what debt?

You are taking debt whenever you use credit card. If you miss/forget payment, some tech fault or sometimes just because you can be charged hefty interest or charges.

You can keep a separate account for your daily transactions.

sorry for the confusion. i use the term “credit card” generically for debit and credit cards.

most people i know have debit cards.

That's because you are used to and expect card frauds. In UPI, the only way money leaves your bank is if you enter your PIN. Even standing instructions (called payment mandates) are required to notify you before they execute and you can stop/cancel it at anytime. (like Apple App Store subscriptions, but for everything!).

What happens when you buy or order something online and it doesn’t come, is broken, they won’t take it back, or a myriad of other situations? That’s fraud.

Withdrawing money from a credit card is taking on debt. Credit and debt are related concepts. Ask yourself this will you have to eventually pay interest on the borrowed money or not?

You can have other (non credit, say savings) bank accounts for security too. It's just as easy (or easier) as getting a credit card here (in India).

> Withdrawing money from a credit card is taking on debt.

i understand where the confusion comes from. i use the term “credit card” generically for debit and credit cards. sorry for the confusion.

> Ask yourself this will you have to eventually pay interest on the borrowed money or not?

No, because after a month, there will be an automatic payment from my bank for the balance. In that time, the bank is giving me their money and they’re on the hook for any fraud.

Why is the bank doing this for you? Out of the goodness of their hearts?

Not sure it qualifies as debt. It's just an agreement with your bank to give them that money in a few weeks / days. And if you commit to spending some small amount per year with your card (usually something like $1500), the bank will offer you some nice perks on their products that you don't get by using other payment methods. If you use something like UPI and you are making some kind of deal with your bank, you are basically losing money.

Credit card annual interest rates can be as high as (or even higher than) 50%. This is not trivial, it can (and does) ruin lives. It is a type of debt (though conditional).

I don't know about other areas, but in the West the overlap between credit card users and people who can get a decent loan at a <10% interest rate is very high. Which is why for most credit card users, credit is a no go if they are not paying it back quickly. UPI counterpart's use case is to send a bit of money to your friend when you share a meal etc.

You have to remember to pay back your credit card debt before the clock runs out. Once you make a UPI payment the transaction ends there (because the money is debited from your bank account and you are not taking on a conditional loan). You don't have to remember to pay the UPI company anything after the fact. I hope this explains how UPI is different from credit cards.

> You have to remember to pay back your credit card debt before the clock runs out

In my experience paying with credit is a fire and forget action, since the money is debited automatically at the end of the month, with no interest. The UX is great, since it only takes a card swipe [as long as I have the funds to pay it back and I'm within my credit limit].

In an scenario where you are not debited right away, I agree completely. But I would only expect that to happen by accident or if the user lacks the financial literacy to understand there are better ways to buy whatever they want. I may be missing some financial corner cases.

I don’t remember when was the last time I’ve paid my credit card, I’ve set it on auto pay. Plus I accumulate enough points at the end of the year for one way trip to India.

> UPI is directly connected to your bank account. It does not go through VISA, Mastercard or whatever.

This is technically incorrect. UPI is connected to NPCI, which runs the platform and charges the participating banks for this service. Same for RuPay cards by NPCI.

The NPCI is nothing like VISA or Mastercard. And you are right pointing this out is only a technicality.

I’ve used credit card for more than 10 years and I’ve never paid any interest in those 10 years. If you pay your bill in full every month then there’s no interest charged.

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