Key Highlights :
1. Individuals with pre-approved credit lines from banks will soon be able to use it to make payments over the Unified Payments Interface (UPI), the Reserve Bank of India (RBI) said on Thursday.2. This can reduce the cost of such offerings and help in development of unique products for Indian markets.3. Pre-sanctioned credit lines or pre-approved credit refers to credit that banks approve for customers after analyzing internal data. UPI currently accounts for 75% of retail digital payments volume in India.4. This move will push lenders to come up with newer products to cater to this.5. There is an opportunity for other card networks to work with banks and develop credit products and offer credit lines which can be linked to UPI for customer usage.6. Pranay Jhaveri, managing director, India and South Asia, Euronet said the step will not only enhance the convenience and flexibility of financial transactions but also pave the way for the further growth of UPI.7. With the added feature of pre-sanctioned credit lines, we can expect a surge in transaction volumes and a more seamless user experience, increasing the adoption of digital payments across the country.
UPI currently accounts for 75% of retail digital payments volume in India. In March alone, it recorded 8.7 billion transactions worth ₹14.1 trillion, showed data from NPCI. This is an increase of 25% from the 6.5 billion transactions recorded in March 2018. This growth is attributed to the increasing adoption of UPI and the increasing number of merchants using it.
UPI has been widely adopted in India due to its convenience and security features. It is also faster than other payment modes such as debit and credit cards. This is because it does not require the user to enter their card number or PIN. UPI also allows users to make payments without having to visit a merchant’s physical store.
NPCI has stated that the growth of UPI is expected to continue in the future. This is because it is a more cost-effective payment mode than other options and it is easier for users to adopt. UPI is also popular among small and medium businesses (SMBs) because it does not require them to invest in hardware or software.
