UPI Now, Pay Later: You will be charged Rs 199 + GST one time non-refundable processing fee at the time of account activation. This processing fee will be deducted from your Pay Later account. To avoid interest charges, maintain sufficient balance in your Pay Later account.
Gone are the days when traditional credit cards were the only option for availing credit facilities. Now users can make payments through the Unified Payment Interface (UPI) application even when their bank account balance is not as much as they want to spend.
The Reserve Bank of India (RBI) has recently made it possible to make transfers from pre-sanctioned credit lines in banks through the UPI network. Some banks are calling it ‘UPI Now, Pay Later’. This feature allows people to avail the facility of UPI transaction by spending from pre-sanctioned credit line and repaying the loan later. Is. Among major banks, HDFC Bank and ICICI Bank have already launched credit lines – HDFC UPI Now Pay Later and ICICI PayLater.
Pre-sanctioned credit lines involve pre-approved credit that banks provide to their customers based on data analytics conducted on both their internal deposits and potential non-customers. The bank decides their credit limit only after checking their credit ability. At present HDFC Bank has set a limit of Rs 50,000.
Use of UPI Now, Pay Later feature!
If your bank offers it and you are eligible for it, then you can use this feature. You can access a pre-sanctioned credit line, similar to the overdraft facility provided by banks.
To use this feature, banks must first obtain your consent to set up a credit line with a specified limit. Once approved, you can spend the pre-sanctioned amount through UPI applications like Google Pay, Paytm, MobiKwik and mobile banking UPI applications.
Then you can later repay the money spent till the due date. Some banks may charge interest on the amount used from the credit line, while some banks offer a credit-free period without interest.
How different from credit card?
This feature can prove to be a game-changer for you as it ensures your access to credit facility by linking your funding account to UPI, thereby eliminating the need for physical credit cards or infrastructure like POS/swipe machines.
What changed for UPI users
Earlier you could link your savings account, overdraft account, prepaid wallet and credit card with the UPI system. But now with this new feature you can also link pre-sanctioned credit lines to do UPI transactions.
Are there any processing fees?
At the time of account activation, you will be charged a one-time non-refundable processing fee of Rs 199 + GST. This processing fee will be deducted from your Pay Later account. To avoid interest charges, maintain sufficient balance in your Pay Later account.
To avoid paying interest, use net banking or mobile banking to immediately transfer the amount spent from your Pay Later account.