Unified Payments Interface (UPI), in association with banks, is now offering credit to app users called 'UPI Credit Line'. This new feature will offer direct credit to the UPI application. You can pay merchants using 'Pay via Credit Line' on your UPI apps, and it will not require a debit. However, repayment within 45 days will save you from penalties.
UPI recorded monthly transactions up to Rs 10,000 crore, and usage is growing daily as domestic banks and other financial institutions join in. The convenience of paying anywhere and at any time digitally, without physically visiting ATMs or Banks, prompted consumers, especially the young generation, to join.
Also Read | India Leads the World in Fast Digital Payments with UPI Growth: IMF.
UPI credit lines offer facilities such as small-ticket borrowing right from your UPI application, Google Pay, or Paytm, without using a physical credit card. However, users can only use them for UPI payments to merchants or peers. It is important for users to repay the credit amount in a timely manner to avoid extra penalties.
Where there is digital comfort in terms of finance, it subsequently also increases the risk. In this, the biggest risk is overspending, as the credit line feels as easy to use as a wallet. Interest charges, penalties, and GST can make you pay more if the payment is not made before the due date.
According to the Economic Times report, UPI-linked credit lines are expected to cross US $1 trillion in transaction value by 2030.