UPI Credit Line: Know All About It

India’s financial landscape saw a significant shift when the NPCI introduced the UPI. Today, UPI is integral to our day-to-day lives. It has made daily money transactions secure, accessible and flexible, adding to the NPCI’s motto of encouraging Indian citizens to resort to cashless digital payments. Another great addition to the array of financial services provided by UPI apps is an online credit line. The UPI credit line lets consumers avail pre-approved credit from participating banks with a single tap, making it easy for them to avail instant money first and pay later. With flexible repayment options, UPI credit line is slowly gaining popularity over time. This article will educate you on how UPI credit line works, what requirements consumers must fulfill to avail one and how Razorpay 

What Is UPI Credit Line? 

A UPI credit line is a unique facility in which your bank’s pre-approved credit line can be availed through your preferred UPI app. This credit line can be availed online, provided consumers meet certain requirements. It is an excellent source for short-term financing. By completing a few simple steps, one can avail a short-term online credit anytime and anywhere.

Pre-Requisites To Avail A Credit Line on UPI

Beneficiaries must meet the following criteria to be eligible for availing online credit on their UPI apps.

1. The beneficiary must be an Indian citizen above 18 years of age.
2. They must own an active bank account in a bank that has tie-ups with NPCI, which facilitates UPI credit.
3. They must have a clean credit history with a CIBIL score of at least 700 to avail significant benefits.
4. Their Aadhaar card number and PAN card numbers must be linked to their bank account for KYC purposes.
5. The bank or lender may require income proof and other financial documents during the application process, especially for non-pre-approved credit lines.

How To Apply For A Credit Line On UPI?

To apply for a credit line on UPI, consumers must be eligible for a pre-approved amount from their bank and their bank must be a partner bank. Certain platforms like Amazon Pay Later have partnered with Axio to provide such online credit lines. Having an active credit line on UPI allows beneficiaries to access short-term loans without having to approach their respective banks. Here are the steps one must follow to avail credit line on UPI.

Choose A UPI App & Activate Relevant Bank Accounts

One can choose from an array of UPI-enabled apps like Google Pay, PhonePe, Paytm, etc. 

Select active bank accounts that have enabled a pre-approved credit line for you and complete the steps to start using them on your chosen UPI platform.

Select Your Bank

Once your bank accounts are linked to your UPI application and username and scan code is generated, go to the ‘Add Account’ section within the app and tap on the ‘Add Credit Line’ option. 

Once this is done, a list of banks will be displayed. Check whether your bank is listed. If it is present in the list, select the bank. Once that is done, the UPI system will check for pre-approved credit lines from the selected bank.

Authentication & Verification

Proceed with Aadhaar-based or OTP verification for authentication by entering relevant details like the first 6 digits of your Aadhaar.

After successful verification, set a dedicated UPI PIN for your credit line separate from your regular UPI PIN.

Accept Terms & Conditions

Accept terms and conditions to activate the credit line. If needed, one may also have to complete the bank’s KYC process to seek the online credit line approval.

Start Using Your Credit Line On UPI

Once activated, the credit line is linked to your UPI ID and ready for use in merchant payments through UPI.

Upon completing the above steps, your bank will check for your creditworthiness and financial history before releasing your credit line on UPI. Once approved, you may proceed to borrow the pre-approved amount through the UPI application.

How Razorpay Supports Credit Lines On UPI

Since the credit lines on UPI are enabled for merchant transactions, Razorpay’s ecosystem allows merchants to accept UPI credit line payments. Here are a few products that support credit line on UPI from merchants.

Razorpay Smart Collect – Supports payments from customers including UPI credit line.

RazorpayX Payouts – To automate credit disbursals to vendors or employees, even if they use UPI credit.

Razorpay Disbursements – Lenders and NBFCs can channel loan amounts directly via UPI credit line.

Razorpay is the only payment gateway provider to approve payments made through UPI credit lines. Businesses registered with Razorpay can now accept payments made through credit lines on UPI lent by leading banks of India. This has paved the way for easy transactions and seamless business processes for several enterprises.

Do’s & Dont’s While Availing Online UPI Credit Line

When you avail a credit line from your bank on your UPI app, following certain best practices is imperative for a seamless experience. Here is a list of Do’s and Don’ts that one must follow while availing short-term credit facilities.

Do’s:

PIN Security: Set a distinct UPI PIN for your “Credit Line on UPI” transactions to enhance security.

Merchant Payments: Make payments only to merchants via QR Codes or e-commerce merchants using the Credit line on UPI.

Autopay Setup: Optimize your payment process by setting up UPI Autopay for timely Credit Line bill payments.

Mobile Number Update: Keep your mobile number updated with the issuing bank for seamless Credit Line linking on UPI.

Balance Check: Regularly check your available balance and outstanding amount on the UPI app before initiating merchant payments.

Don’ts:

PIN Sharing: Avoid sharing your UPI PIN with anyone to prevent unauthorized access to your Credit Line.

Uniform PINs: Refrain from using the same UPI PIN for both your “Credit Line on UPI” and Savings Bank account for added security.

OTP Sharing: Never share the OTP received during the registration process to maintain the confidentiality of your account.

Neglect Credit Line Guidelines: Do not ignore the Credit Line permitted usage guidelines, ensuring compliance with the terms defined by the issuing bank for a smooth financial experience.

Credit Limit Breach: Adhere to the credit limit assigned by your issuing bank to avoid overextending your Credit Line on UPI.

Restricted Payments: Avoid making payments in restricted categories, as specified by the issuing bank/RBI, using “Credit Line on UPI.”

Delayed Credit Line Repayment: Adhere to the repayment schedule and terms to prevent any adverse impacts on your credit score and ensure a smooth credit relationship.

Conclusion

The NPCI has taken a revolutionary step by enabling consumers to avail short-term credit via UPI credit lines. It has facilitated a seamless linking of banks and online payment platforms, making the entire credit process flexible, secure and accessible to a lot of underserved consumers. Since there is a dedicated UPI PIN, consumers can be ensured of their transactions being securely carried out. Credit line on UPI can be beneficial if used with caution. Razorpay supports this initiative by allowing registered merchants to accept UPI credit line payments. This further contributes to the government’s motto of financial inclusion.

FAQs

What’s the daily limit for UPI credit line usage?

Depending on your bank’s terms and conditions, the upper limit can be variable. Different banks may have different policies on the maximum credit usage. It is better to consult with your respective bank for the same.

Does it affect credit score?

Any credit borrowed will affect the credit score. So will irregular loan repayments. Hence, it is advised that consumers pay their dues in time.

Can I use it across multiple UPI apps?

UPI credit line can be availed across several apps, but these transactions must be carried out with due consideration for the terms and conditions of your credit line agreement with the respective bank.