How to pay your bills with credit card reward points? A complete guidenews24

Credit card spends earn you a good number of reward points, especially if it is in low-risk consumption categories such as grocery, utility bills, apparel, restaurant, supermarkets, telecom and entertainment. But can you use the reward points to make direct payments at merchant outlets and e-commerce platforms?

Several leading card issuing banks have their own ‘smart buy’ portals that offer insta vouchers and other modes to redeem the reward points. But IndusInd Bank, Kotak Mahindra Bank and TWID, a rewards-based payments network that has tied up with leading banks, are among those that allow you to use the reward points to make direct payments at the merchant outlet. Here is a guide on how to make direct merchant payments by using your credit card reward points.

How does paying through reward points work?

The new-age payment method will show the credit card reward points at the site of the partner merchants where you can use them for purchases. You can pay the entire bill amount using your reward points on your credit card. While making a purchase on the merchant’s portal, you have to select ‘Pay with rewards’ at the payment gateway. You will then be redirected to the ‘Select points’ section where your reward points will pop up automatically.

You can select any one of the rewards from the list and click on ‘Proceed to pay’ to complete the transaction. But the mobile number registered with the bank and the merchant should be the same to use reward points for purchases.

PIN is not required for redeeming reward points. The merchant will swipe your credit card in the PoS (Point of Sale) machine and redeem your reward pointsagainst your purchases just like you use it for normal transactions. The reward points available for payments will be similar to the number of points you earn as cashbacks with your credit card. But you have to check whether the outlet accepts reward points as payment beforehand as card issuing banks have tied up with only a select group of merchants.

E-commerce providers such as Yatra, Zepto, BookMyShow, Netmeds, Medibuddy and Abhibus are among those who accept reward points as payment. Godrej Nature’s Basket, Jack and Jones, Archies, Clarks and Globus Stores are among the merchants who accept reward points for purchases at their outlets in select cities.

Currently, TWID has partnered with more than 10 issuers. Over 1 lakh merchants including JioMart, My Jio, Vodafone Idea, McDonalds, Licious, ixigo, makemytrip and Myntra have tie-ups with TWID for reward points-based payments.

Can you settle the entire bill amount through reward points?

This varies with each bank. For instance, IndusInd Bank has stipulated that maximum redemption of reward points can be done for only up to 25% of the bill payment amount or 25% of your reward points balance, whichever is lower. The limit is lower for certain merchants. The balance amount can be paid only using the bank’s credit or debit card. But several banks allow full payments through reward points.

What happens if the transaction is cancelled or payment fails?

In case of cancellation of the transaction, the terms and conditions of the merchant will be applicable. For refunds, settlement will be done first towards the payment done through credit or debit cards. Only after this, the settlement for reward points will be processed.

How popular is the rewards points-based payments system?

It is fast catching up among credit card users. Reward consumption grew approximately 15% month-on-month across TWID’s network, reflecting increasing consumer reliance on this mode of payment. With consumers actively using reward points for essential and lifestyle purchases, e-commerce, quick commerce, travel and utility emerged as the popular categories for reward points payments.

E-commerce remains the most popular redemption avenue, with90% of users opting to use rewards for online shopping, and66% acknowledging that rewards programs influence their purchase decisions, according to TWID.

“As rewards programs gain traction, they’re increasingly seen as a compelling alternative to cashbacks. The challenge lies in delivering instant, seamless, and rewarding experiences,” according to Rishi Batra, COO & Co-founder, TWID.

Allirajan M is a journalist with over two decades of experience. He has worked with several leading media organisations in the country and has been writing on mutual funds for nearly 16 years.