The Unified Payments Interface (UPI) has become an integral part of our daily financial transactions, allowing for swift payments by linking Internet banking to UPI accounts. Many individuals and businesses have embraced UPI due to its seamless and efficient processes. Previously, UPI transactions were only possible with sufficient funds in the linked bank account or UPI wallet. However, a new development allows UPI payments even with an insufficient account balance.
The Reserve Bank of India (RBI) issued a circular on September 4, broadening the scope of UPI payments by enabling transactions to and from pre-approved credit lines at banks. This allows for payments using the UPI system through pre-sanctioned credit lines with the individual customer’s prior consent.
This new feature, known as UPI Pay Later, permits users to spend from pre-approved credit lines and settle the dues later through UPI transactions. HDFC Bank and ICICI Bank have introduced this feature as HDFC UPI Now Pay Later and ICICI Pay Later respectively. It operates seamlessly on applications such as Google Pay, Paytm, and PhonePe.
Upon receiving the user’s consent, the bank establishes a credit line with a predetermined limit. The user can utilize this credit and must settle the dues within the specified timeframe.
HDFC Bank’s ‘UPI Now Pay Later’ scheme is now in effect. Account holders can use this feature across all UPI apps. Users are granted a credit limit of up to ₹50,000 with a maximum credit period of 6 months.
ICICI Bank’s Pay Later facility provides users with instant digital credit for up to 45 days. This credit can be used to pay bills, shop online, and make payments to any merchant UPI ID instantly. Activation of this service incurs a one-time fee of Rs. 500 plus GST. Additionally, a service charge of Rs. 75 plus applicable taxes is applied for every Rs. 3000 spent monthly from the ICICI Bank Pay Later account.
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