Digital Payments Revolution: PhonePe Rolls Out Credit Line on UPI

Bengaluru: Fintech leader PhonePe announced the launch of a new credit line feature on the Unified Payments Interface (UPI) on Thursday, nearly a year after its introduction by the National Payments Corporation of India (NPCI). This feature allows customers to access short-term credit, enhancing the payment options available at checkout for merchants using PhonePe’s Payment Gateway.

According to PhonePe, this development aims to minimize friction during transactions and reduce cart abandonment rates, ultimately driving higher sales for merchants. The credit line is designed to cater to low-ticket, high-volume retail loans.

The rollout of the credit line feature has faced challenges, particularly due to the NPCI’s delay in defining the interchange fee associated with this service. An announcement regarding the interchange fee, anticipated to be between 1% and 1.2% per transaction, is expected later this year, as reported by Business Standard in April.

Currently, several banks, including Axis Bank, HDFC Bank, ICICI Bank, Indian Bank, Punjab National Bank (PNB), and State Bank of India (SBI), have implemented this feature. It facilitates monthly transaction volumes of approximately ₹100-200 crore, while credit card transactions via UPI reach around ₹10,000 crore per month.

“This marks our second initiative to enhance credit usage on UPI, following the successful introduction of RuPay Credit Cards on UPI. We are confident that digital payments in India will continue to flourish, and PhonePe is dedicated to offering innovative, top-tier solutions for our customers,” stated Deep Agrawal, Head of Payments at PhonePe.