The National Payments Corporation of India (NPCI) is bringing a big change to the Unified Payments Interface (UPI). Now, UPI users can pay in easy monthly installments (EMI) when making payments. This new feature will make UPI more than just a payment platform and turn it into a full credit system.
When a customer buys something at a store by scanning the QR code, they can choose the EMI option. It will be as simple as choosing EMI after swiping a credit card. Now, you do not need a credit card to buy expensive items. Paying in installments will be very easy through the UPI app.
Who Will Get This Facility?
At first, only customers who already have a credit line from the bank will get this facility. Banks will approve the credit line after checking the customer’s repayment history and credit score. With this facility, customers will get more flexible payment options and more freedom while shopping.
New Opportunities for Banks and Fintech
The EMI facility on UPI will create new business opportunities for banks and fintech companies. While debit card transactions on UPI and RuPay are free, credit payments will have an interchange fee of about 1.5%. Companies like Navi and Paytm, which already give credit lines, are expected to benefit from this new facility.
This facility may also make small loans and “Buy Now, Pay Later” models more popular on UPI. Even people without credit cards will be able to buy goods and pay in installments. UPI currently handles about 20 billion transactions per month and has 250–300 million users. This number may grow further with the EMI option.
However, banks are cautious because there is a risk of default on small loans. Still, this new step will open a new horizon in India’s digital payment system.