The Reserve Bank of India (RBI) has introduced a significant change to UPI payment services. The RBI has allowed banks to transfer pre-approved credit lines through the UPI network, which means customers can pay through UPI even if they don’t have money in their bank account. With this new feature, UPI services can act like credit cards and provide low-value credit to around 300 million users of the payments platform.
RuPay Credit Card Will Be UPI Linked
RBI Governor Shaktikanta Das announced that the RuPay credit card is now allowed to be linked to UPI. Currently, UPI transactions are enabled between deposit accounts in banks, sometimes intermediated by prepaid instruments, including wallets. The expansion of UPI scope will enable transfers from among pre-approved credit lines in banks.
Interest-Free Credit and Transactions
The success of this new product will depend on whether the new rules allow banks to structure short-term loans similar to credit cards by providing interest-free credit for 30 days and reward points for transactions, as credit cards are the most popular option for customers. It has attractive features.
How UPI Payment Works with Pre-Approved Credit Lines?
UPI payment through pre-approved credit lines works by linking your UPI ID to your pre-approved credit line account. Once the account is linked, you can pay using UPI even if you have no balance in your bank account. The payment is made by borrowing money from the pre-approved credit line, which is transferred to the recipient’s
FAQs
How much credit can I get through UPI payment with pre-approved credit lines?
The credit limit will depend on the pre-approved credit line that is linked to your UPI ID. Banks will determine the credit limit based on various factors such as credit score, income, and repayment history.
2. How do I link my UPI ID to my pre-approved credit line account?
You can link your UPI ID to your pre-approved credit line account by contacting your bank. They will guide you through the process.
3. Will I have to pay interest on the credit borrowed through UPI payment with pre-approved credit lines?
It depends on the bank’s policy. Some banks may offer interest-free credit for a certain period, while others may charge interest from the day of borrowing.
Conclusion
The new feature of UPI payment with pre-approved credit lines is a significant step towards financial inclusion, making it easier for people to access credit. With this new feature, UPI services can now provide low-value credit to millions of users. The advantages of UPI payment with pre-approved credit lines are numerous, including ease of use, no additional sign-ups required, and no issuance of credit cards. It remains to be seen how successful this new product will be in the market, but it has the potential to revolutionize the payments industry.( INVC NEWS )
