NPCI is set to roll out an EMI feature on UPI, enabling users to convert payments into installments. Learn how the NPCI EMI system will boost credit adoption in India.
The National Payments Corporation of India (NPCI) is preparing to take the Unified Payments Interface (UPI) ecosystem to the next level by introducing an EMI (Equated Monthly Installments) feature. After the successful rollout of RuPay credit cards on UPI and the inclusion of credit lines, the next step aims to make digital credit even more convenient—allowing users to instantly convert UPI payments into EMIs.
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UPI’s Evolution Towards Credit
Since its launch, UPI has primarily functioned as a debit-based, real-time payment system. However, with India’s rising appetite for credit, NPCI has gradually integrated credit-linked features. The acceptance of RuPay credit cards on UPI was a major milestone, followed by the introduction of credit lines on UPI. Now, the ability to split transactions into EMIs directly during payment could become the next game-changer.
This move reflects NPCI’s broader strategy to drive digital credit adoption, especially among younger, tech-savvy users who prefer flexibility in managing expenses.
How the EMI on UPI Feature Could Work
According to reports, NPCI is working on enabling fintech firms to add an EMI conversion option within UPI payments. This will allow customers to make a purchase by scanning a QR code and then instantly opt to split the payment into EMIs—similar to how cardholders can convert transactions into EMIs at POS (Point-of-Sale) terminals.
For consumers, this means:
Instant credit access while paying via UPI.
Flexibility to manage larger spends by converting them into manageable installments.
Seamless experience without needing separate applications or credit cards.
For fintech companies and banks, it could unlock a new revenue stream through interchange fees and credit interest, making UPI not just a payment enabler but also a credit ecosystem.
Growing Ecosystem Support
Several players in the financial ecosystem are already showing interest in the model:
Navi CEO Rajeev Naresh highlighted that while EMI options are not yet live, the next version of Navi’s UPI product will enable users to split payments into EMIs via QR code scanning.
Paytm and Navi have already tied up with banks to offer credit lines through UPI.
PayU CEO Anirban Mukherjee recently pointed to the rising demand for instant credit solutions over UPI, underscoring the opportunities this shift presents.
Additionally, sources indicate that NPCI plans to levy an interchange fee of about 1.5% on credit line transactions made via UPI. This model mirrors card transactions at merchants and could create a sustainable business case for banks and fintechs.
Why This Npci Emi Move Matters
The introduction of EMI on UPI could be a significant milestone for India’s digital payment landscape for several reasons:
Expanding Credit Access – Millions of UPI users, especially those without credit cards, can access flexible repayment options.
Boosting Merchant Sales – Retailers and service providers could see higher-value transactions as consumers gain confidence in splitting payments.
Revenue Generation for Ecosystem Players – Banks, fintech firms, and NPCI stand to benefit from interchange fees, interest on credit, and higher transaction volumes.
Aligning with India’s Credit Growth – With consumer credit demand rising rapidly, UPI’s integration with EMI products supports this trend.
Challenges Ahead
While the concept is promising, there are some challenges that need careful attention:
Risk management – Instant credit needs robust underwriting to prevent defaults.
Consumer awareness – Users must clearly understand EMI terms, including interest rates and penalties.
Regulatory oversight – The Reserve Bank of India (RBI) may impose guidelines to ensure responsible lending practices.
Conclusion
NPCI’s plan to introduce an EMI option on UPI marks the next chapter in India’s digital payment journey. What began as a peer-to-peer payment platform is now evolving into a full-fledged digital credit ecosystem.
By blending convenience, accessibility, and credit flexibility, this initiative has the potential to reshape consumer spending habits and boost merchant sales, while opening new monetization opportunities for banks and fintechs. If executed well, EMI-on-UPI could make digital credit as ubiquitous as UPI payments themselves.
FAQs
Q1. What is the NPCI EMI feature on UPI?
The NPCI EMI feature will allow users to instantly convert UPI payments into EMIs, making digital credit more accessible and flexible.
Q2. How will NPCI EMI work?
Users can pay via UPI and choose to split the transaction into EMIs, similar to converting card payments into installments at POS terminals.
Q3. Which companies are working on NPCI EMI?
Fintech firms like Paytm and Navi, in partnership with banks, are preparing to offer EMI options through UPI.
Q4. Will there be charges on NPCI EMI transactions?
Yes, NPCI may levy an interchange fee of around 1.5% on credit line transactions over UPI, similar to card-based EMI models.
Q5. Why is NPCI introducing EMI on UPI?
NPCI aims to expand digital credit adoption, boost merchant sales, and generate revenue opportunities for banks and fintechs.
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