PhonePe’s New Credit Line on UPI Feature

Nitin Konde, Apoorva Bajj

Aug 23, 2024 — 3 min read

PhonePe’s New Credit Line on UPI Feature

A new feature called "Credit Line on UPI" has been introduced on PhonePe's platform. This feature gives customers the ability to link their pre-approved credit lines to UPI, which enables them to make payments without any hassle. Users now have the ability to control their monthly costs using short-term financing while simultaneously making purchases from millions of different retailers thanks to this unique alternative.

The Reserve Bank of India (RBI) made the decision to broaden the scope of the Unified Payments Interface (UPI) to include pre-approved credit limits, which will result in an increase in the usefulness of UPI applications. Because users may now link their credit lines to UPI on PhonePe, they are able to make payments in a manner that is both more flexible and more efficient.

Win-Win Situation for Both Consumers and Merchants

Additionally, retailers who are using the PhonePe Payment Gateway (PG) are able to provide their clients with an additional payment option throughout the checkout process. This option is available to both consumers and merchants.

Both friction and cart abandonment are reduced as a result of this, which ultimately leads to an increase in sales. Simply integrating with PhonePe PG is all that is required for merchants to add 'Credit Line on UPI' as a payment option in order to make this offering available.

How does UPI's Credit Line Work?

The 'pre-sanctioned credit line at banks through UPI' is an innovative financial solution that is aimed to alter the landscape of lending, as stated on the website of the National Payments Corporation of India (NPCI). With the use of this product, people and businesses are able to have access to pre-approved credit lines from financial institutions. Through the facilitation of the supply of low-ticket, high-volume retail loans, it promotes economic growth and enhances financial inclusion.

By utilising cutting-edge technology such as data analytics and artificial intelligence, financial institutions are able to recognise prospects for credit lines for clients and merchants who are engaged in major UPI-based digital payments.

According to the website of the National Payments Corporation of India (NPCI), "Since the customer is going to use UPI, which involves the customer being always connected and available in real time, the banks are able to begin with low-ticket credit lines and work their way up based on consumer behaviour and repayment patterns from there."

How Can One Use UPI to Access His Credit Line?

Through the use of the same UPI wires that millions of Indians are already familiar with, the credit line on UPI operates. To access it, users can do the following:

1. Users are able to link their Credit Line on UPI by selecting the bank from whom they obtained the Credit Line and clicking on the profile area located in the upper left corner of the home page of the PhonePe app.

2. When the user clicks on the bank, the Credit Line that is related with their enrolled telephone number will be connected on UPI.

3. Once the user has successfully linked it, they will be needed to set a UPI PIN.

Following the completion of this step, the Credit Line option will be displayed as a payment instrument on the payment page while the user is in the process of making a payment.

Recently, Karnataka Bank and Navi Technologies, a business that provides financial services, made an announcement on the launch of a credit line on UPI. Karnataka Bank will be one of the early users of this next-generation credit product as a result of the private sector lender's strategic agreement with Navi, which will allow them to extend credit lines to customers.