1. Home
  2. /
  3. Investing
  4. /
  5. The Rise of UPI...

The Rise of UPI Credit: How It Benefits Consumers, Merchants, and Banks?

  1. Home
  2. »
  3. Investing
  4. »
  5. The Rise of UPI Credit:…

Gone are the days when you had to let go of the sale season on month ends? Or when you were forced to settle for less expensive items due to a tight budget. Alternatively, you keep your laptop purchase because you don’t have a credit card.

The RBI has introduced a UPI Credit line to allow UPI users to shop without interruption or hassle. A UPI credit line provides you with a pre-approved credit limit even if you do not have a credit card. Interested in learning how?

Let us dive into this detailed article, which covers every aspect of UPI line credit, from its definition to how you can take advantage of this new facility.

Define UPI credit

UPI Credit Line is an innovative credit facility introduced by the Reserve Bank of India on September 4, 2023, to facilitate hassle-free borrowing for UPI users. Your bank will approve a flexible credit limit to allow you to avail of the “Buy Now, Pay Later” facility.

You can use this credit limit to make online and offline purchases at points of sale with QR as easily as you would with UPI, even if your account has a low or no balance.  

Some banks may offer a credit-free period, similar to credit cards, in which you must pay a minimum balance by a specific due date. However, some banks may charge interest on the amount drawn from the credit line. The interest rate charged will vary from bank to bank, primarily depending on repayment culture and CIBIL score. 

How Does UPI Credit Work?

Imagine you approach a Bank to issue a credit card. The Bank based on your age, income, past repayment track record, and creditworthiness sets up your credit card limit. 

UPI Credit lines work on the same guiding principle. If you are using UPI, you already have your bank account linked. To check whether your Bank supports a UPI credit line, you can visit www.digisaathi.info.

Then, visit your branch to submit –

  1. Application
  2. KYC documents
  3. Income Proof (Like Salary Slip if salaried and Income Tax Returns if non-salaried)

The Bank will approve a UPI Credit Line after assessing your creditworthiness and setting up the repayment conditions, interest rate, etc. Once approved, the credit limit will be accessible instantly.

Features of UPI Credit Line

Instant Credit Access 

UPI credit lines provide immediate access to funds, allowing users to make purchases even when their bank accounts don’t have sufficient balances. 

This instant credit is pre-approved and can be used for various transactions across UPI-enabled merchants.

Unified Payments Interface

UPI credit combines the convenience of UPI payments with the benefits of credit. Users can manage their spending and repayments within a single platform, making financial management more straightforward and efficient.

No Need for Multiple Cards 

With UPI credit, there’s no need to carry multiple credit or debit cards. Users can rely on their UPI app for regular UPI payments and credit transactions, simplifying the payment process.

Wide Acceptance 

UPI credit is accepted by a vast network of merchants, just like traditional UPI payments. This widespread acceptance ensures users can use their credit line for most shopping needs.

Eligibility Criteria of UPI Credit Line

To ensure that the UPI credit line is extended to financially responsible  users who are likely to repay the borrowed amount, the following checks are set in place-

Pre-approved Credit Limit: Users must have a pre-approved credit limit from their bank, which can be available through the UPI platform.

Good Credit Score: A good credit score is often required to qualify for the credit line, as it indicates the user’s creditworthiness.

Regular UPI Transactions: A history of regular UPI transactions may be considered to assess the user’s financial behavior and transaction patterns.

Banks and Apps That Will Support UPI Credit Line

  • Axis Bank (Testing among a limited set of users)
  • HDFC Bank (Offers HDFC UPI Now Pay Later)
  • ICICI Bank (Offers ICICI Pay Later)

It’s still in the testing phase in-

  • Punjab National Bank (PNB)
  • State Bank of India (SBI)
  • Kotak Mahindra Bank
  • BHIM
  • Google Pay
  • PayTM
  • Payzapp

Explain the current scenario of credit card penetration and usage in India

The volume of UPI-based digital payments has witnessed a massive growth from 17.4 million in 2017 to 83,714.4 million in 2023. Even the credit card market is booming and expected to grow at a CAGR of 18.7% from 2022 to 2026.

This clearly outlines the scope of credit in the financial landscape in the coming years. The UPI Credit line can prove highly beneficial in tapping this potential and boosting our economy.

Ref:India: volume of UPI digital payments 2023 | Statista 

Benefits of UPI credit Line for consumers

Higher Purchasing Power

UPI Credit enables you to make purchases beyond your immediate financial means, providing an extra cushion until your next paycheck.


UPI Credit lets you shop anytime, anywhere, and directly from your smartphone, simplifying your shopping experience.

Real-Time Payments 

Funds are transferred instantly in real-time, ensuring faster payments without delays.


You can use a different PIN for general UPI transactions and the UPI credit line. This double-authentication process provides an additional layer of security, increasing trust and reducing fraud risk.


UPI caters to the masses, and in general, the transactions have lower fees than traditional credit facilities offered by Banks/financial institutions.

Financial Inclusion 

Under the UPI credit line umbrella, even those without credit cards can obtain credit. This has widened the accessibility of financial services to all.

Simplified Credit Access

The pre-approved nature of UPI Credit lines simplifies the borrowing process.


Users may receive rewards similar to those offered by credit cards but at a lower value due to the Merchant Discount Rate (MDR) in credit cards. 

Benefits of UPI credit for merchants

Here are some unique benefits of UPI Credit Line for merchants and businesses:

Enhanced Cash Flow 

Merchants can maintain a steady cash flow by using the credit line to cover expenses without waiting for sales proceeds.

Increased Sales 

Access to UPI credit lines can result in higher purchase values. With bigger wallets, consumers are more likely to purchase rather than postpone it until the following month, increasing overall sales.

Customer Expansion 

By offering a UPI credit line, merchants can now attract customers who prefer not to pay upfront or those without immediate funds.

Higher Conversion Rates

UPI Credit has fostered customer loyalty. When a credit option is available, customers are less likely to abandon their carts or reduce their shopping spree, leading to higher purchases.

Operational Efficiency 

The UPI Credit Line simplifies transactions, eliminating the need for multiple payment methods or carrying multiple credit cards, thereby reducing operational complexity.

Quick Settlements 

Merchants receive payments promptly, ensuring better liquidity and financial stability.

Market Competitiveness 

Offering a UPI Credit Line can help a business stand out in the marketplace. Consumers are more likely to come back if you provide a range of payment options. Helps you attract new customers while retaining existing ones.

Access to Consumer Insights

When you use the UPI Credit Line, you gain access to valuable data analytics that will help you better understand consumer habits and preferences. You can use this big data to develop stronger approaches and tailor your offerings to meet your customers’ expectations. 

Benefits of UPI credit for banks and fintech

Now, moving to how the UPI Credit line can benefit Banks and Fintech companies-

Expand Customer Base 

UPI credit allows banks to reach a wider audience, including those without traditional banking access, to improve their lending portfolio. 

Reduce Operational Costs 

Digital transactions lower the cost of processing and issuing credit.

Improves Risk Management 

Real-time data helps in assessing credit risk more accurately.

Increases Transaction Volume 

Easy credit options can lead to more frequent transactions.

Drive Innovation 

UPI credit provides a platform for fintech to develop new financial products.

Enhances User Experience 

Simplifies the borrowing process, making it user-friendly and accessible.

How will the UPI Credit Line redefine financial transactions in the coming years?

Let’s envision how the UPI Credit line could reshape the future:

Broadening Credit Access

It has the potential to democratize credit availability, making it easier and faster for a wider range of people to obtain credit, particularly those outside the traditional banking system.

Stimulating economic activity

With instant credit available, consumers are more likely to spend, potentially increasing economic activity and growth. 

Accelerating the digital economy

The integration fits in with the government’s digital India initiative, which aims to propel the country towards a more robust digital economy by bridging the credit gap between urban and rural consumers. 

The Bottom Line

Like any other credit facility, a UPI credit line has its own challenges. You must take precautions to avoid falling into a debt trap. While the UPI credit line provides instant and paperless credit, it also exposes you to the risk of fraud. So, avoid using the same PIN for your “Credit Line on UPI” and bank account linked to UPI.

To maintain a healthy credit score, use your UPI credit line responsibly, avoid credit limit breaches, and stick to the repayment schedule and terms. 


  1. Are there transaction charges for using UPI Credit?

    Currently, there are no charges for transactions through UPI, in line with the Zero MDR policy by the Government of India.

  2. Can UPI Credit impact my credit score? 

    Yes, just like any credit product, the responsible use of UPI Credit can positively impact your credit score, while misuse or non-payment can negatively affect it.

  3. Can I link multiple bank accounts to UPI Credit? 

    Typically, UPI Credit is linked to a single bank account, but you can check with your bank to see if you can link multiple accounts.

How useful was this post?

Click on a star to rate it!

Average rating 5 / 5. Vote count: 2

No votes so far! Be the first to rate this post.

+ posts

I’m Archana R. Chettiar, an experienced content creator with
an affinity for writing on personal finance and other financial content. I
love to write on equity investing, retirement, managing money, and more.

Share on:

Want A Personalized Portfolio of 20-25 Potential High Growth Stocks?

*T&C Apply

Chat with us