PhonePe enables ‘Credit Line on UPI’. Click to learn more and how to enable it
PhonePe enables 'Credit Line on UPI'. Click to learn more and how to enable it
Digital payments platform PhonePe has introduced a new feature called ‘Credit Line on UPI,’ enabling consumers to link their bank-provided credit lines directly to UPI on the PhonePe app. This new offering allows users to make effortless payments to merchants while benefiting from short-term credit to better manage their monthly expenses.
“This feature empowers consumers to make purchases conveniently across millions of merchants, offering them the flexibility of short-term credit, which can greatly assist in managing their monthly finances,” PhonePe announced in a statement on Thursday.
The initiative follows the Reserve Bank of India’s (RBI) recent move to expand the scope of the Unified Payments Interface (UPI) to include pre-approved credit lines. Dubbed ‘Credit Line on UPI,’ this feature allows consumers to access credit lines from banks and utilize them through UPI-enabled apps, significantly increasing the range of merchants where these credit lines can be used.
“Not only does this option benefit consumers, but it also provides merchants on the PhonePe Payment Gateway (PG) with an additional payment method at checkout. This can reduce friction and decrease cart abandonment, ultimately leading to higher sales. Merchants simply need to integrate with PhonePe PG to offer ‘Credit Line on UPI’ as a payment option,” the company explained.
Deep Agrawal, Head of Payments at PhonePe, expressed confidence in the feature’s potential impact, stating, “This offering will revolutionize the access and use of credit in the country. We are committed to introducing a variety of new use cases in close collaboration with ecosystem partners.”
Understanding Credit Lines and UPI Integration
A credit line is a pre-approved amount of money that a bank allows a consumer to borrow as needed, with interest charged only on the amount used. The ‘Credit Line on UPI’ is an innovative financial service designed to transform the lending landscape by allowing individuals and businesses to access these pre-approved credit lines through their UPI apps.
According to the National Payments Corporation of India (NPCI), this product aims to promote economic growth and enhance financial inclusion by facilitating low-ticket, high-volume retail loans. Advanced technologies such as data analytics and artificial intelligence enable banks to identify potential credit line opportunities for both customers and merchants who are active in UPI-based digital payments.
The NPCI further explained that banks can start with low-ticket credit lines and progressively offer higher amounts based on the user’s payment behavior and repayment patterns.
How to Access Credit Line on UPI
Accessing a credit line on UPI is straightforward and leverages the familiar UPI interface. Here’s how users can link and utilize their credit line:
On the PhonePe app, users can navigate to the profile section at the top left of the home page.
They can then select the bank from which they have availed the credit line.
Upon selecting the bank, the credit line associated with the user’s registered phone number will be linked to UPI.
Users will need to set a UPI PIN to finalize the linking process.
Once completed, the credit line will appear as a payment option when making transactions.
In a recent development, Karnataka Bank and Navi Technologies have launched a credit line on UPI. Through a strategic partnership with Navi, Karnataka Bank became one of the early adopters of this next-generation credit product, offering consumers a seamless way to access and use credit through UPI.
This new feature by PhonePe is expected to significantly enhance the digital payment experience for millions of users across India.
