It is a financial service allowing users to make payments via UPI even with insufficient funds, repaying later, with interest or interest-free option.
Following the RBI's recent expansion of UPI, banks are now allowing users to make payments using pre-sanctioned credit lines.
RBI's notification on September 4 proposed widening the UPI's scope to include transfers from pre-approved credit lines.
Banks have the authority to set terms and conditions for the use of these credit lines, as per their board-approved policies.
This development enables UPI to support credit-funded payments, reducing costs, and encouraging unique Indian market products.
Customers receive a pre-approved credit limit & can utilize it through their UPI app, even when their bank account has insufficient funds.
Users can repay the borrowed amount, similar to settling a credit card bill. Banks have the flexibility to establish interest rates.
Some banks offer a 45-day interest-free period, similar to "buy now, pay later" scheme. You are charged no interest.
HDFC and ICICI introduced PayLater via UPI, with HDFC creating a new account for payments through an overdraft.
ICICI Bank offers a 45-day digital credit service via PayLater, debiting dues from the user's account.