The National Payments Corporation of India (NPCI) is preparing to introduce EMI payment options on UPI, allowing users to split QR code payments into instalments. This next wave of innovation follows RuPay credit cards and credit lines on UPI, as NPCI doubles down on credit-led growth. With fintechs like Navi and Paytm readying integrations, EMI on UPI is set to democratize access to credit and provide new revenue streams for payment apps, reshaping India’s digital lending landscape.
Core Development
NPCI’s proposed update will let consumers choose EMIs at the point of scanning a QR code, similar to converting card swipes into EMIs at PoS terminals.
Fintech firms will integrate the feature into UPI apps once live, giving millions of users access to small-ticket credit and checkout financing. NPCI has already permitted this under its product guidelines, paving the way for banks and fintechs to launch the service.
Key Drivers / Issues
Success of RuPay credit cards and credit lines on UPI has set the stage.
UPI already processes 20 billion transactions monthly with over 250–300 million active users.
A planned 1.5% interchange fee on credit line transactions creates a revenue model for fintechs.
Consumer demand for buy-now-pay-later style products remains strong.
Stakeholder Impact
For consumers, EMI on UPI opens instant access to small-ticket loans without needing a credit card. Fintechs and banks gain new monetization avenues, diversifying beyond fee-free UPI payments. Retailers could see higher sales as affordability improves. For the economy, broader digital credit adoption deepens financial inclusion and supports consumption.
Industry & Policy Reactions
Rajiv Naresh (Navi CEO) confirmed EMI payments will be the next big credit feature on UPI.
A Gurugram fintech founder highlighted NPCI’s decision to levy interchange fees, ensuring sustainability for apps.
PayU CEO Anirban Mukherjee said UPI is evolving into a full payment system with its own credit suite.
Bankers remain cautious about bad loans from small-value consumer credit.
Challenges Ahead
Ensuring robust underwriting to prevent NPAs in small-ticket lending.
Aligning credit bureau reporting and interest-free periods with regulatory clarity.
Managing operational risks as UPI scales beyond payments into lending.
Strategic Outlook
EMI on UPI could become a game-changer for digital credit, bridging the gap between payments and lending. With fintechs, banks, and NPCI aligned, the move will accelerate credit penetration, especially for consumers without credit cards, positioning UPI as India’s most comprehensive retail payments and credit platform.
Why This Matters
By embedding credit directly into UPI, India is taking a major step in financial inclusion and digital lending innovation. EMI payments could redefine how millions of Indians access, use, and repay credit in everyday transactions.
