The Pension Fund Regulation and Development Authority (PFRDA) has decided to discontinue using credit cards as a payment method for accepting subscriptions/contributions in secondary accounts in the National Pension System (NPS). The regulator has instructed all Points of Presence (PoP) to stop accepting credit card payments to NPS Tier II accounts immediately.

In a notification dated 3 August 2022, PFRDA stated: “The Authority has decided to stop using credit cards as a payment method in NPS secondary accounts for subscription/membership payments. All PoPs are therefore advised to immediately stop accepting credit cards as NPS secondary payment method for a top-level account.”

The regulator said it had decided to stop the use of credit cards in NPS Tier-II accounts to exercise the powers conferred by Section 14 of the PFRA Act 2013 “to protect the interests of subscribers and to regulate, facilitate and ensure that the Act applies orderly development of the state pension system and pension scheme.”

The use of credit cards to pay for investment plans like mutual funds or stocks is generally discouraged due to concerns about over-leveraging high-interest funds. Credit card users must pay 0.6% (excluding GST) as a payment gateway fee to make donations to NPS via internet banking using a credit card.

The NPS Tier II account is a voluntary account that can be opened if the subscriber has an NPS Tier I account. Secondary accounts have flexible withdrawal and withdrawal rules. Additionally, contributions to NPS Tier II accounts do not qualify for any tax exemption.