UPI (Unified Payments Interface) has become an essential part of our daily transactions, allowing us to make quick and easy payments using our Internet banking accounts.
UPI payments have become popular among users and businesses due to their convenience and ease of use. Previously, UPI payments could only be made if there was sufficient balance in the user's bank account or UPI wallet. However, a new feature now allows users to make UPI payments even if their balance is insufficient.
In a big step that could revolutionize the way digital payments work in India, two of the biggest banks in the country - HDFC & ICICI - have jumped on the 'PayLater' bandwagon with the new Unified Payments Interface. This comes after the RBI's recent approval. On September 4, the Reserve Bank of India (RBI) announced that it is expanding the scope of UPI payments to allow users to make transactions from pre-sanctioned credit lines at banks.
What is UPI Pay Later?
Basically, it's a feature that lets you spend money from pre-approved credit and pay for it later by using UPI. Right now, there are two versions of this feature - one from HDFC Bank and one from ICICI Bank. You can use it with Google Pay and Paytm apps, and you can also use it with PhonePe apps.
How does it work?
When a bank establishes a credit line after obtaining the user's approval. The credit limit is determined by the bank and the user can use the credit and pay their fees on time.
According to the official website of HDFC Bank, in case you use your PayLater account balance of ₹5,000 for 10 days, then interest will be charged on ₹5,000 for 10 days only. At the end of the month, this interest will be debited from the PayLater account
HDFC Bank's UPI Now Pay Later feature has been launched for its account holders. According to the bank's official website, this feature is available through all the bank's UPI apps and allows users to access credit limits of up to 50,000 rupees with a maximum credit period of 6 months. If a user uses their PayLater balance for a period of 10 days, they will be charged interest on the balance of 10 days only, which is debited from their PayLater account upon completion of the month.
According to Hindustan Times, ICICI Bank Pay Later allows users to get instant digital credit for up to 45 days. They can pay their bills, make purchases online, and make payments to any merchant's UPI ID. The bank's website states that customers will have to pay a one-time activation fee of Rs 500 plus GST. For each Rs. 3000 spent each month, a service fee of Rs. 75 plus applicable taxes will be charged.
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