Fintech major PhonePe introduces 'credit line on UPI' on its platform

Fintech major PhonePe on Thursday announced the launch of a credit line on the Unified Payments Interface (UPI) feature nearly a year after the feature was launched by the National Payments Corporation of India (NPCI).

The feature enables customers to avail themselves of short-term credit.

The option also allows merchants on PhonePe’s Payment Gateway to offer customers an additional payment option at the time of checkout.

“This not only reduces friction but also lowers cart abandonment, leading to higher sales,” the company said in a statement.

The feature enables the availability of low-ticket, high-volume retail loans.

The credit line on UPI was off to a slow start since the NPCI has not yet defined the interchange fee for this facility. It is expected to announce the interchange this year, with it ranging from 1 per cent to 1.2 per cent per transaction, Business Standard reported in April.

At present, lenders such as Axis Bank, HDFC Bank, ICICI Bank, Indian Bank, Punjab National Bank (PNB), and State Bank of India (SBI) are live with this facility.

It processes transaction values of about Rs 100-200 crore every month. Credit cards on UPI record about Rs 10,000 crore a month.

“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 strength to strength, and PhonePe is committed to providing the most innovative and best-in-class solutions to our customers,” said Deep Agrawal, head of payments, PhonePe.