The landscape of digital payments in India is undergoing a massive transformation with the introduction of the 'UPI Now Pay Later' feature. Launched by the National Payments Corporation of India (NPCI), this feature aims to provide instant liquidity to users, ensuring that a low bank balance never stands in the way of an essential transaction. It In essence functions as a pre-approved credit line linked directly to your UPI ID, offering a smooth 'Buy Now, Pay Later' (BNPL) experience within the UPI ecosystem.
What is UPI Now Pay Later?
UPI Now Pay Later is a digital credit facility where banks grant a pre-approved credit limit to their customers. Unlike traditional UPI transactions that debit money directly from your savings account, this feature allows you to borrow funds instantly from the bank to complete a purchase. You can then repay the borrowed amount within a specified interest-free period or as per the bank's terms. It bridges the gap between a traditional credit card and the simplicity of a UPI scan.
How Does the Credit Line Work?
The process begins with the bank evaluating a user's creditworthiness based on their transaction history and CIBIL score. Once approved, a credit limit—ranging from a few thousands to lakhs—is assigned. When making a payment at a merchant outlet, the user can select. The 'Credit Line' as the payment source instead of their linked bank account. The transaction is authorized instantly, and the amount is deducted from the credit limit. At the end of the billing cycle, the user receives a statement and must clear the dues to avoid interest charges.
Key Benefits of Using UPI Credit Line
The primary advantage is the availability of emergency funds without the need for a physical credit card. It offers high flexibility, as UPI is accepted almost everywhere in India, from small tea stalls to large retail showrooms. The onboarding process is entirely paperless and happens within minutes on apps like BHIM, Google Pay, or PhonePe. Also, disciplined use of this facility can help users build or improve their credit scores over time, making them eligible for larger loans in the future.
Eligibility Criteria and Documentation
To avail of this facility, you must be an Indian citizen aged 18 or above. A stable income source and a healthy CIBIL score (typically 750+) are preferred by most banks, while you need a UPI-enabled bank account and a mobile number linked to your Aadhaar and PAN card for e-KYC purposes. While most leading private and public sector banks have started rolling out this feature, eligibility may vary from one lender to another based on their internal risk policies.
Conclusion: The Future of Credit
UPI Now Pay Later is set to revolutionize financial inclusion in India. By integrating credit directly into the most popular payment method in the country, NPCI is making formal credit accessible to millions. However, users must remain vigilant about repayment schedules. While it provides great convenience, financial discipline is key to ensuring that this 'pay later' facility remains a tool for empowerment rather than a debt trap.