ICICI to offer EMIs for UPI payments above Rs10,000

ICICI has initiated an EMI facility for UPI payments, which are made by QR code scanning. This service will be facilitated to customers who are eligible for ICICI Bank's buy now, pay later scheme. Buy now, pay later is a credit facility that provides some relief in times of low cash flow. Transactions that are above Rs 10,000 can be paid in three, six, or nine monthly instalments. It is predicted that this scheme will be introduced to online shopping soon. Again in this segment, the facility can only be applied to categories such as electronics, groceries, fashion apparel, travel, and hotel bookings.

The introduction seemed to come after the Reserve Bank of India allowed UPI payments through pre-sanctioned credit lines from banks. ICICI Bank is said to be the first to introduce this feature in India. The lender has taken this decision as they have noticed most payments are now made through UPI. Customers also typically opt for UPI transactions under the Pay Later scheme.

RBI providing sanction for UPI payments through allowed credit lines will increase the book now, pay later (BNPL) space. In the past, the RBI didn't approve the idea of loading prepaid payment instruments (PPIs) using credit lines. The Pay Later facility was introduced in 2018 by ICICI to provide customers with the opportunity to buy items at a low price on a digital platform. PayLater provides enormous facilities like online shopping, bill payments, and payment to any retailer using UPI ID at physical stores straight away. The PayLater dues will be automatically debited from the ICICI customer's savings account. At present, UPI has become the most popular and frequently used payment platform for customers in India.

The service initiation will help the UPI network open the door for payments that are backed by credit from the bank and this might increase the affordability of lakhs of ICICI’s customers, as they could pay just by using a QR code or by making payments using EMIs. EMI refers to the regular repayments that are made to repay an outstanding loan within a specific period. Utilization of this EMI scheme would help in affording items that are of medium-to-high value. Access to credit lines through UPI channels would immaculate the credit experience at the point of purchase. This will in turn provide channels for using credit across a larger merchant base. A credit line provided by the UPI would promote further innovation in digital financing and banking sectors.