UPI Credit Payments Explained: How Paying Later Through QR Codes Is Changing Digital Spending

UPI now allows users to pay using credit instead of bank balances, blending instant payments with deferred repayment. Experts welcome the flexibility but warn that discipline and regulation will decide its long-term success.

India’s payment ecosystem took a major step in 2025 as UPI credit cards enabled users to make QR-based payments on credit, repaid later with interest-free periods under RBI and NPCI oversight.

The new functionality allows users to link eligible credit cards to UPI apps and pay merchants directly without drawing from their bank account. Transactions are settled on credit, offering rewards and interest-free periods similar to traditional card usage. 

The feature operates under the Reserve Bank of India and National Payments Corporation of India, ensuring regulatory supervision across the payment chain.

What Is the Issue: How Credit Is Entering Everyday UPI Payments?

Traditionally, UPI payments were debit-based, drawing funds instantly from bank accounts. With UPI credit cards, users can now make payments using approved credit limits while continuing to scan QR codes at neighbourhood stores, online platforms, and service providers.

The regulatory basis for this shift comes from the RBI circular dated 24 June 2022, which permitted the linking of credit cards, initially RuPay, to UPI under the Payment and Settlement Systems Act, 2007. The circular is available on rbi.org.in → Notifications → Payment Systems.

The change brings credit into India’s most widely used payment rail, expanding access while raising new concerns around overspending.

Benefits That Make the Product Attractive

Industry leaders say the biggest appeal lies in ease of use and flexibility.
 

Mahesh Shukla, Founder and CEO of PayMe, said the product merges convenience with flexibility. Paramdeep Singh, founder of LongTail Ventures, added that it expands credit usage beyond physical card machines into everyday QR-based payments.

This structure explains the interest in UPI credit cards among salaried and digitally active users.

Previous Developments: How Regulation and Infrastructure Enabled This Shift?

India’s move towards credit-enabled UPI payments builds on years of digital payment expansion. According to NPCI data cited by Mint, UPI processed 185 billion transactions in FY25, reflecting its dominance in small-value payments.

The RBI has steadily expanded permissible use cases while maintaining oversight. Banks are required to report all credit exposure to credit bureaus, and transactions are monitored in real time through NPCI’s fraud detection systems.

Who Should and Should Not Use Credit-Based UPI
 

Experts agree the product works best when users understand billing cycles and credit limits. Shukla stressed the importance of layered security and RBI-mandated fraud monitoring. Singh noted that upcoming data protection rules could further strengthen trust.

For users seeking clarity on how credit lines work within UPI ecosystems, the LoansJagat provides relevant context.

Conclusion

UPI credit cards bring flexibility and rewards into everyday payments, but success will depend on responsible use. Strong regulation and user awareness will determine whether this innovation strengthens or strains household finances.

As adoption grows, clearer disclosures, spending controls and faster dispute resolution will be critical to protect users.

If implemented carefully, UPI credit cards could deepen digital credit access without compromising financial discipline.

 

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