Razorpay launch first payment aggregator to support "Credit Lines on UPI" for its merchant base

From bills to groceries to online shopping, UPI has undoubtedly become India’s go-to payment method for everyday transactions. But, up until now, transacting on UPI meant that you had to have some balance in your bank account or a Credit Card.

However, with the latest move towards democratizing consumer credit access, The Reserve Bank of India (RBI) & NPCI recently introduced pre-approved Credit Lines on UPI through products such as Step Up Credit, Paylater Lines, and EMIs, enabling banks to allot a line of credit to consumers for retail expenditures. Consumers can now make low to high ticket purchases without worrying about a shortage of funds.

Keeping with the company’s philosophy of being first to market on UPI innovations, Razorpay is now proud to be the first payment aggregator to support Credit Lines on UPI for its merchant base. The company believes that the flexibility afforded by UPI-based credit is likely to boost consumption among Indians, benefiting businesses & the overall economy. Focussed on catering to the ever-evolving needs of merchants and delivering greater convenience, this disruption of Razorpay is made possible through partnership with leading banks.

According to a recent report, 30 Cr Indians actively make payments to businesses via UPI. However, there are only ~9.5 Cr unique credit card users in India, suggestive of how premium it is to access credit today. Moreover, BNPL as an industry has made strong inroads in the last 3-5 years, with a projected CAGR of 12.2% from 2023-2028. With products that are familiar to consumers, Credit Lines on UPI has the potential to be momentous in adoption across urban & semi-urban India.

Khilan Haria, SVP Razorpay, said “The introduction of Credit Lines on UPI is a major breakthrough for consumers & merchants alike, making it easy for users to access funds & experience the flexibility of short term credit. Put simply, I believe this innovation is a gamechanger for millions of consumers who do not have access to credit cards and will positively impact millions of merchants as it offers customers more accessible credit options, leading to faster and more frequent purchases, significantly bolstering their cash flow.”

Khilan added, “At Razorpay, with our consistent business-centric focus, we will continue to launch and support critical industry-first innovations with an intent to solve for multiple money movement challenges faced by thousands of our merchants and help them unlock a new wave of financial opportunities and expand reach to millions of consumers.”

How will Credit on UPI impact businesses?
For businesses, this innovation unlocks new segments, providing them with a safe and reliable credit-based payment method. Some trends & benefits include:

- Higher sales due to flexible repayment options that give customers the confidence in making high-ticket purchases, on products such as automobiles, electronics & travel.

- Catering to a larger target audience, expanding beyond traditional credit card users, that could potentially also result in lower cart abandonment.

- Improved customer experience due to the variety of methods available, contributing to increased conversions and loyalty.

What does Credit on UPI mean for consumers?
For consumers, this innovation provides the benefits of credit cards without the hassles of getting one issued, including benefits such as:

- Flexibility to make high-value purchases without waiting for their next paycheck, eliminating concerns about fund transfers or low account balances.

- Convenience of accessing low-ticket loans, & flexible repayment options, differentiating Credit on UPI from traditional loans. The ease in accessing a credit line stands as a critical differentiator to traditional credit instruments.

- Unlocking rewards & offers, managing monthly cash flows, and also keeping track of day-to-day expenses, by clearing all bills at the end of the credit period.

The Future Ahead
Credit on UPI will make payment processes simpler for merchants, reducing hassles and improving efficiency. Razorpay & merchants will be able to co-create credit products based on the merchant customer base and add customizations such as smaller credit lines, waive-off periods, grace periods, and customized repayment periods. The ease of credit accessibility can potentially lead to higher average transaction values for merchants.

The near future will usher in cutting-edge Loan Management Systems that have the potential to support smaller transactions, offering a more flexible and dynamic approach. This could revolutionize the way banks provide "credit on the fly." Credit on UPI is not just a payment innovation, it's a paradigm shift, empowering merchants and consumers alike, paving the way for a more accessible and dynamic credit landscape.