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Tag: Credit Line

  • Paytm Relaunches BNPL as Credit Line on UPI to Boost Digital Lending

    The fintech giant has revived its buy-now-pay-later (BNPL) product, Paytm Postpaid, as a credit line on UPI more than a year after it was put on hold. Paytm Postpaid, which was introduced in collaboration with Suryodaya Small Finance Bank, would allow consumers to obtain immediate short-term credit through the “Spend Now, Pay Next Month” plan.

    Customers who are more likely to use this credit are the only ones being offered the service; a wider rollout is anticipated in the upcoming months. The facility provides short-term credit for a maximum of 30 days.

    Why Paytm Closed the BNPL Credit Line?

    In May 2024, Paytm discontinued its Postpaid service, pointing to a general deterioration in asset quality in the sector. Before being placed on indefinite hold in December 2023, Postpaid was first introduced as a BNPL product. It was then recast as a small-ticket personal loan option.

    The business stated at the time that it would not start up again until the credit cycle was over. Since then, the company’s management has insisted that BNPL is still a worthwhile product and will reappear when the macroeconomy improves and lenders feel more at ease giving out small-ticket loans. Paytm CEO Vijay Shekhar Sharma hinted on the company’s Q1 results call that BNPL was halted because lenders were growing wary of small-ticket loans (less than INR 50,000).

    He went on to say that BNPL will return when the personal credit is restored because he personally adored the product and was a promoter of it. The company is adamant that it will return. In contrast to the consistent development of its payments business, he reaffirmed that BNPL was one of Paytm’s most potent non-linear growth drivers, able to propel disproportionate revenue and margin expansion.

    Improved Market Conditions Rightly Poised to Re-launch BNPL

    The product’s rebranding as a credit line on the UPI offering implies that the business believes the market attitude has improved. Additionally, Paytm has been profitable at this moment. In the first quarter of FY26, the fintech giant reported a net profit of INR 122.5 Cr, compared to a loss of INR 840.1 Cr in the same period last year.

    During the reviewed quarter, operating sales soared 28% year over year to INR 1,918 Cr. Notably, prominent UPI players are increasingly using the credit line on UPI offerings.

    Such an option was introduced by PhonePe in August 2024, while Flipkart’s super.money strengthened its credit-on-UPI play by acquiring BNPL startup BharatX.

    Quick
    Shots

    •Offers short-term credit under “Spend
    Now, Pay Next Month” scheme.

    •Credit line valid for up to 30 days;
    currently limited to select users.

    •Full-scale rollout expected in the
    coming months.

    •BNPL was earlier paused due to asset
    quality concerns and lender caution.

  • PhonePe’s New Credit Line on UPI Feature

    A new feature called “Credit Line on UPI” has been introduced on PhonePe’s platform. This feature gives customers the ability to link their pre-approved credit lines to UPI, which enables them to make payments without any hassle. Users now have the ability to control their monthly costs using short-term financing while simultaneously making purchases from millions of different retailers thanks to this unique alternative.

    The Reserve Bank of India (RBI) made the decision to broaden the scope of the Unified Payments Interface (UPI) to include pre-approved credit limits, which will result in an increase in the usefulness of UPI applications. Because users may now link their credit lines to UPI on PhonePe, they are able to make payments in a manner that is both more flexible and more efficient.

    Win-Win Situation for Both Consumers and Merchants

    Additionally, retailers who are using the PhonePe Payment Gateway (PG) are able to provide their clients with an additional payment option throughout the checkout process. This option is available to both consumers and merchants.

    Both friction and cart abandonment are reduced as a result of this, which ultimately leads to an increase in sales. Simply integrating with PhonePe PG is all that is required for merchants to add ‘Credit Line on UPI’ as a payment option in order to make this offering available.

    How does UPI’s Credit Line Work?

    The ‘pre-sanctioned credit line at banks through UPI’ is an innovative financial solution that is aimed to alter the landscape of lending, as stated on the website of the National Payments Corporation of India (NPCI). With the use of this product, people and businesses are able to have access to pre-approved credit lines from financial institutions. Through the facilitation of the supply of low-ticket, high-volume retail loans, it promotes economic growth and enhances financial inclusion.

    By utilising cutting-edge technology such as data analytics and artificial intelligence, financial institutions are able to recognise prospects for credit lines for clients and merchants who are engaged in major UPI-based digital payments.

    According to the website of the National Payments Corporation of India (NPCI), “Since the customer is going to use UPI, which involves the customer being always connected and available in real time, the banks are able to begin with low-ticket credit lines and work their way up based on consumer behaviour and repayment patterns from there.”

    How Can One Use UPI to Access His Credit Line?

    Through the use of the same UPI wires that millions of Indians are already familiar with, the credit line on UPI operates. To access it, users can do the following:

    1. Users are able to link their Credit Line on UPI by selecting the bank from whom they obtained the Credit Line and clicking on the profile area located in the upper left corner of the home page of the PhonePe app.

    2. When the user clicks on the bank, the Credit Line that is related with their enrolled telephone number will be connected on UPI.

    3. Once the user has successfully linked it, they will be needed to set a UPI PIN.

    Following the completion of this step, the Credit Line option will be displayed as a payment instrument on the payment page while the user is in the process of making a payment.

    Recently, Karnataka Bank and Navi Technologies, a business that provides financial services, made an announcement on the launch of a credit line on UPI. Karnataka Bank will be one of the early users of this next-generation credit product as a result of the private sector lender’s strategic agreement with Navi, which will allow them to extend credit lines to customers.

    PhonePe Success Story: India’s Leading Payments App
    PhonePe is an Indian digital payment and financial services company. Explore PhonePe’s business model, revenue, founders, funding, valuation, growth, and more.
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