New Delhi: The National Payments Corporation of India (NPCI) is set to introduce a new product on UPI that works like a credit card. The RBI has allowed banks to offer credit lines to customers through UPI. Several banks, including Axis, HDFC, ICICI, Indian Bank, and PNB, are already using this product. Customers get a fixed credit line and only pay interest to the bank on the amount of credit they use. 

Uses Cases Of Credit Line Feature On UPI

The new credit feature on UPI allows customers to make purchases without seeing immediate fund outgo from their accounts. Payments are settled at the end of a cycle, and this service is available exclusively to shops. The shopkeepers bear the cost of credit in terms of fees, ensuring there is no charge for the customer. 

While this is a new product, it leverages the existing UPI payment and acceptance infrastructure, making it seamless and efficient for both customers and merchants. This innovative feature aims to enhance the convenience and flexibility of digital transactions in the retail sector. 

In the eight years since its launch, UPI has become the primary method for account-to-merchant payments, surpassing debit cards. UPI credit offers capabilities similar to credit cards, with one of the main adoption drivers being the lower fees merchants pay compared to credit card transactions.