Credit Line on UPI: Transforming Payments in India

Pine Labs’ recent industry analysis, in collaboration with McKinsey, reveals that credit line on UPI (CLOU) is emerging as a significant catalyst for the growth of credit-linked payments at checkout, as India’s lending environment rapidly evolves. With 330 million individuals ready for credit, there are still 150–200 million who are underserved. This underserved population is the primary focus of innovative credit solutions such as CLOU.

According to the report, by the year 2030, credit-linked payment solutions are projected to generate revenue comparable to that of home and auto loans. The movement will be propelled by UPI’s extensive network of 65 million QR-enabled merchants and a digitally savvy customer base, which already includes 490 million UPI users.

Although there is a high awareness level regarding services like Buy Now Pay Later (BNPL) or Equated Monthly Installments (EMI) on debit cards, the actual utilisation remains low. This is mainly due to issues related to discoverability, acceptance, and trust. Currently, consumers tend to favour credit options that are easily accessible through familiar applications, user-friendly, clear in terms of terms, and widely accepted.

CLOU’s Innovative Approach to Credit

CLOU’s strategy is to utilise the existing QR infrastructure to provide small-ticket credit, which unlocks sustainable lending opportunities for banks and Non-Banking Financial Companies (NBFCs). This offering enables lenders to present tailored propositions, enhance risk management through AI-driven underwriting, and scale their services through partnerships within the ecosystem.

Investment in Technology and Partnerships

The report underscores the necessity for banks and technology firms to invest in flexible, modern technology frameworks and to establish strong alliances with merchants and third-party application providers (TPAPs) to facilitate widespread adoption.

Furthermore, it highlights that a new lending era is beginning at the point of sale, with innovative credit products poised to transform the shopping and borrowing experiences of Indian consumers.