Experience the Future of Digital Payments with HDFC and ICICI Bank’s UPI Credit
In a significant development for UPI users, HDFC Bank and ICICI Bank have launched a groundbreaking feature that allows individuals to make UPI payments even when their bank accounts lack sufficient funds. This initiative, enabled by the Reserve Bank of India (RBI), opens up new possibilities for seamless digital transactions.
HDFC, ICICI Bank Starts Offering Credit On UPI: Make UPI Payments Today, Pay Later!
Previously, UPI users were limited to linking their savings accounts, overdraft accounts, prepaid wallets, and credit cards to the UPI system. However, the RBI’s recent directive has expanded this capability, permitting the utilization of pre-approved credit lines to conduct UPI transactions.
Empowering UPI Users with Credit Line Facilities
As of September 4, 2023, following the RBI notification, banks have been authorized to offer a credit line facility to UPI users. This empowers individuals to spend from a pre-sanctioned credit line and settle their dues at a later date. These pre-sanctioned credit lines are based on data analytics, assessing the creditworthiness of both existing deposit customers and potential non-customers.
Introducing “UPI Now, Pay Later”
This transformative feature, often referred to as “UPI Now, Pay Later,” is already available from leading banks such as HDFC Bank and ICICI Bank. Under this system, account holders can access overdraft facilities for their UPI transactions through various UPI-based apps, including Google Pay and MobiKwik.
Both HDFC Bank and ICICI Bank have set a maximum credit line of Rs 50,000, depending on the eligibility of the account holders.
HDFC Pay Later Feature:
When activating the PayLater feature on your UPI app, a new account is created with a designated credit line for UPI transactions. However, it’s important to note that this overdraft account can only be used for payments to merchants under the PayLater on UPI scheme, with restrictions on fund transfers to individuals. Interest is only charged on the portion of the credit limit used and for the number of days it is used, not on the entire amount.
The interest rate is calculated based on the borrowed amount and the number of days it is used. For instance, if you utilize your PayLater account balance of Rs 5,000 for 10 days, you’ll be charged interest on Rs 5,000 for 10 days only. This interest is debited from the PayLater account at the end of the month. Failing to pay the interest within three days (grace period) will result in deduction from your primary account (Savings/Current). Additionally, a fee of Rs 199 + GST is applied for new applications.
ICICI Pay Later Feature:
ICICI Bank’s PayLater facility offers account holders up to 45 days of zero-interest digital credit, suitable for bill payments, online shopping, and transactions with any UPI ID merchant. PayLater dues are automatically deducted from your ICICI Bank Savings Account. ICICI Bank charges a one-time activation fee of Rs 500 plus GST and a service charge of Rs 75 + applicable taxes for every Rs 3,000 of monthly spending from your ICICI Bank PayLater account (applicable on monthly spends of Rs 3,000 & above). Moreover, penal interest based on the daily outstanding amount post the ‘Pay by Date’ and fixed late payment charges are levied in subsequently generated bills until dues are settled.
Important Usage Restrictions:
It’s crucial to note that PayLater cannot be used for making credit card payments, transferring funds to other bank accounts, or conducting person-to-person fund transfers.
