Summary:

According to Zeta, Unified Payments Interface (UPI) credit lines could generate more than $1 trillion in transaction value by 2030. Since its establishment in August 2016, UPI has grown rapidly and is expected to handle 13 billion transactions by April 2024. This growth is attributed to the increasing popularity of UPI-based credit lines over traditional credit products like overdrafts and credit cards.

Three major factors are driving this growth: rising credit demand, a shift to digital payments, and advances in credit management. Despite India's low credit-to-GDP ratio, with Tier 2 and rural areas accounting for 60% of new credit, banks face challenges due to limited reach. Approximately 45% of household spending is digital. Zeta projects that 40% of person-to-merchant (P2M) transactions will shift to credit, boosting UPI volumes. By 2025, P2M transactions could represent 75% of UPI volumes, reaching US$ 2.5 trillion by 2030. UPI credit lines help banks access alternative data while reducing costs.

Source: IBEF

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