Why EMI on UPI could be the next big thing in digital payments

India’s digital payment system is poised for another significant advance with the implementation of EMI options on Unified Payments Interface (UPI). After revolutionising payments with instant, zero-cost transactions, the UPI is now gearing up to make credit more accessible, directly through everyday apps.

According to the National Payments Corporation of India (NPCI), the new feature will enable users to convert their UPI purchases into equated monthly installments (EMIs), similar to credit card payments. This allows consumers to opt for flexible repayment options directly from their UPI app instead of paying the full amount upfront.

"We have always been at the forefront of financial innovation, and were the first to launch UPI 2.0 in partnership with NPCI to make digital collections more inclusive and reliable," said Sunil Yadav, Chief Information Officer, Satin Creditcare Network Ltd.

"For consumers, this brings flexibility and convenience since large purchases can be converted into easy installments without disturbing monthly budgets, all within the trusted UPI ecosystem," added Yadav.

Banks and fintechs are already partnering to enable this feature. Users with pre-approved credit lines or RuPay credit cards can soon use them to pay in instalments via UPI at both online and offline merchants.

Anup Agrawal, Co-founder and CEO of Kiwi, “Amid the festive season, both online and offline merchants are witnessing a surge in big-ticket items such as jewellery, electronics, and home appliances. With EMI on UPI, consumers can spread their purchases in instalments with just a few taps.”

How it works

They can scan a QR code, select the EMI option from their UPI payment app, and view tenures and monthly repayment schedules. “We are witnessing that 25 to 35-year-olds contribute to over half of EMI spending, while tier 2 and 3 cities are emerging as strong growth drivers. EMI on UPI has significant potential due to its seamless integration with the UPI ecosystem and easy accessibility. This is expected to further boost the adoption of digital payments in India,” said Agrawal.

EMI on UPI eliminates the inefficiencies of cheque-based collections. Unlike cheques that bounce and cause delays, UPI payments offer multiple opportunities to complete a transaction, ensuring higher success rates, smoother cash flows, and greater trust for both businesses and customers. This shall lead to an overall uptick in demand, making repayment more manageable.

"We see EMI on UPI as more than just a payment feature; it’s a game-changing transition that removes friction, builds trust, and supports sustainable growth in India’s digital ecosystem," said Yadav.