PhonePe on Thursday announced the launch of the ‘Credit Line on UPI’ on its platform, under which consumers who avail credit lines from their banks can now link these credit lines to UPI on PhonePe and seamlessly make merchant payments.
“This feature enables consumers to make purchases with ease across millions of merchants and avail the flexibility of short-term credit that helps them manage their monthly expenses better,” PhonePe said in a statement on August 22.
The move comes after the Reserve Bank of India (RBI) recently expanded the scope of UPI to include pre-approved credit lines, called ‘Credit Line on UPI’, allowing consumers to avail credit lines through banks and use these through their UPI apps. This will help increase the number of merchants where credit lines can be utilised.
“Along with consumers, the option also allows merchants on the PhonePe Payment Gateway (PG), to offer their customers an additional payment option at the time of checkout. This not only reduces friction but also lowers cart abandonment leading to higher sales. Merchants simply need to integrate with PhonePe PG to add ‘Credit Line on UPI’ as a payment option to enable this offering,” PhonePe stated.
Deep Agrawal, head of payments at PhonePe, said, “This offering will revolutionise the access and use of credit in the country and we are focussed on offering a varied set of new use cases in close partnership with the ecosystem players.”
What Is A Credit Line?
A credit line is the amount of money a bank lets you borrow as needed, and you only pay interest on what you use.
What is Credit Line on UPI?
According to NPCI’s website, the ‘pre-sanctioned credit line at banks through UPI’ is an innovative financial offering designed to revolutionise the lending landscape. This product empowers individuals and businesses to access pre-sanctioned credit lines from banks. It facilitates the availability of low-ticket, high-volume retail loans, fostering economic growth and enhancing financial inclusion.
“Leveraging advanced technologies such as data analytics and artificial intelligence, banks can identify credit line opportunities for customers and merchants engaged in significant UPI-based digital payments. Since the customer is going to use UPI in which customer is always connected, available real-time the banks can start from the low-ticket credit lines and go higher up based on consumer behaviour and repayment patterns,” according to the NPCI website.
How To Avail Credit Line on UPI?
Credit line on UPI rides on the same UPI rails that millions of Indians are familiar with. Here’s how users can avail it:
1) Users can link their Credit Line on UPI by clicking on the profile section on the top left of the PhonePe app home page and select the bank from which they availed the Credit Line.
2) The Credit Line associated with their registered phone number will be linked on UPI upon clicking on the bank.
3) After linking, the user will be required to set a UPI PIN
Once this is done, the Credit Line option will show up as a payment instrument on the payment page while the user is making a payment.
Recently, Karnataka Bank and financial services company Navi Technologies announced the launch of credit line on UPI. The private sector lender will be offering credit lines through a strategic partnership with Navi, marking Karnataka Bank as one of the early adopters of this next-gen credit product.
