Indian fintech PhonePe grabs the opportunity provided by RBI and offers its customers an ability to link pre-approved credit line to UPI apps.
PhonePe introduced the ‘Credit Line on UPI’ feature on August 22. The new service allows users to make payments on their pre-approved credit lines more flexibly and efficiently.
The feature is enabled by the recent decision of the Reserve Bank of India (RBI) to expand the scope of the national instant real-time payment system Unified Payments Interface (UPI) with pre-approved credit lines.
Since its inception in 2016, UPI has attracted over 300 million monthly active users in India. The payment system has also expanded internationally, with initiatives in Bhutan, UAE, Malaysia, Singapore, and France. UPI accounts for about half of all global instant payment transactions, while PhonePe held a 46% share of UPI usage in India as of Q4 2023.
UPI is a system that unites multiple bank accounts into a single mobile application (of any participating bank). It merges several banking features, seamless fund routing and merchant payments. The system currently processes over 75% of all India’s retail digital payments.
With the addition of pre-approved credit lines from any local bank to the system, merchants on the PhonePe Payment Gateway (PG) can offer their customers an additional payment option at the time of checkout. Meanwhile, end customers will have less stress when making purchases with credit costs.
PhonePe management believes the new feature will be very popular, judging from the previous success of Rupay Credit Cards on UPI.
“We believe digital payments in India is growing strength to strength and PhonePe is committed to providing the most innovative and best-in-class solutions to our customers. 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.”
Deep Agrawal, Head of Payments at PhonePe
Earlier this year, Indian e-commerce marketplace Flipkart launched a Unified Payments Interface (UPI) to expand its digital payment transaction offerings. In the company’s app, consumers can use UPI to pay for e-commerce financial operations, scan and pay with an ID, recharges, bill payments, and any other product or service.
