NPCI eyes EMI payments on UPI in fresh credit play push

The National Payments Corporation of India (NPCI) is focusing majorly on credit products on the Unified Payments Interface network, as it scouts for the next round of growth around retail digital payments.

After RuPay credit cards and credit lines on UPI, the next product update around credit on the network would be to enable conversion of UPI payments into EMIs.

According to two people in the know, NPCI is set to enable fintech firms to integrate an EMI payment feature that allows consumers to convert their UPI payments into EMIs on the fly. While fintechs are not live with this product yet, it is something NPCI could leverage to push credit transactions on UPI.


This experience would be similar to card payments at point of sales terminals (PoS), where a customer is allowed to convert a card swipe into EMI on the terminal itself.

NPCI is considering introducing the new feature after RuPay credit cards on UPI became mainstream, followed by credit lines opening up on the UPI networks. Some banks have already gone live with fintechs like Navi, Paytm to offer credit lines to UPI users.

“Today, we are not yet live with EMI, but the next version—which NPCI has permitted via its product guidelines—will allow the consumer, at the point of scanning the QR code (subject to certain terms and conditions), to split payments into EMIs,” said Navi chief executive officer Rajiv Naresh.

While Navi is not live with the feature yet, the Sachin Bansal-promoted company is focusing majorly on UPI with the sole purpose of leveraging the credit features on the payments mode, which will help build sustainable businesses for UPI apps.

Fintech founders are driven by the fact that credit payments on UPI can help generate revenue unlike savings account-based payments, where no charge can be levied on the merchant—the government has a zero-fee mandate on RuPay debit cards and UPI payments.

The founder of a Gurugram-based fintech startup told ET that NPCI has decided on levying an around 1.5% interchange fee on credit line on UPI, which means there is definitely an opportunity to generate revenue.

Speaking with ET last week, PayU CEO Anirban Mukherjee pointed out that opportunity opening up around instant credit on UPI.

UPI is becoming more than just a payment method, it is becoming a full payment system, he said.

Just like the card ecosystem has everything from credit cards, debit cards to EMI payments on cards, UPI will also have its own complete credit suite which will encourage many consumers who do not have a credit card to get access to check out financing.

On a monthly basis, UPI is processing around 20 billion transactions, and around 250-300 million active users are on the network already. But to push it further and get more types of payments into the network, industry insiders told ET that they need to double down on credit and that is something NPCI is driving towards.

Additionally, with clarifications around credit bureau filings of such loans, interest-free periods on credit line products, industry insiders are confident that more banks will join the credit on UPI bandwagon.

“Small-value credit, buy-now-pay-later type journeys will be replicated on UPI, but the question remains whether banks will be able to control bad loans for small retail consumer credit disbursed via UPI; lenders will grow this very cautiously,” said a banker with a Mumbai-based private sector lender.