PhonePe Launches Instant UPI Credit Line Feature: Revolutionizing Digital Payments in India

Now on PhonePe, users can benefit from an instant credit line through UPI, a feature launched by the RBI in April 2023. PhonePe stated on August 22, “This feature allows consumers to make purchases easily across millions of merchants and provides the flexibility of short-term credit to help manage monthly expenses better.”

PhonePe dominated the UPI ecosystem in April 2024 with 49% of the market share across P2M (person to merchant) and P2P (person to person), as per data issued by NPCI, With this added feature of the UPI credit line on PhonePe, its head, Deep Agarwal, said, “We are excited to launch Credit Line on UPI on our platform. This is the second offering that will unlock the potential of credit usage on UPI, following the tremendous success of Rupay Credit Cards on UPI. We believe digital payments in India are growing from 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 focused on offering a varied set of new use cases in close partnership with the ecosystem players.”

What is the NPCI UPI credit line?

It is a pre-sanctioned credit line through banks; in other words, users can borrow funds from bank-approved credit lines through their UPI. This announcement was made by RBI governor Shaktinanda Das in the first monetary policy review in April 2023. At present UPI carries out 75% of retail digital payments volume in India. Currently, UPI payments are enabled among deposit accounts at banks, sometimes intermediated by pre-paid instruments that include a wallet as well.

With UPI-enabled credit support, user can get on-demand credit support whenever they want once their credit line is approved by the bank without going through the hassle of paperwork and this available credit will be paid after the approved time on the UPI platform.

What is a credit line?

It’s a lending facility where users can borrow money on a flexible and revolving basis from a lender. It has a predetermined borrowing limit that users can avail of at any time of need. To get a credit line, a borrower needs to apply for the same with the lender.

When compared to a loan, a credit line is a more flexible mode of borrowing but usually has higher interest rates. Credit cards are one of the examples of credit line.

Steps to avail of UPI credit line on PhonePe

Step 1: Users can apply online for a credit line on UPI. You are required to fill out an application with your PAN card, Aadhaar card and a mobile number linked to your Aadhaar card

Step 2- Now the respective bank will review your application from your documents by going through your personal financial details, like income, credit score, and borrowing history, and determine your creditworthiness, They will approve or reject your application based on your creditworthiness.

Step 3– If your credit line is already approved by the bank, you can easily go to the profile section on the top left corner of PhonePe and link your credit line on the app. The credit line associated with your phone number will be linked to PhonePe app.

Step 4– Now you are ready to make payments online as well as offline on the merchant UPI QR code.

The introduction of the UPI credit line on PhonePe marks a significant milestone in the evolution of digital payments in India. By providing users with instant access to credit, this feature not only enhances the convenience of managing day-to-day expenses but also underscores PhonePe’s commitment to driving innovation in the financial ecosystem.

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