Credit line on UPI could cross US$1 trillion in transaction value by 2030: Zeta
- IBEF
- August 23, 2024
Zeta, a banking tech unicorn, forecasts that the Unified Payments Interface (UPI) credit lines could surpass US$ 1 trillion in transaction value by 2030. This credit line offers 80% of pre-approved, inactive credit customers on the UPI network instant access to credit. Since its launch in August 2016, UPI reached 1 billion monthly transactions in just over 3 years and recorded 13 billion in April 2024 alone. Zeta projects that UPI will achieve the US$ 1 trillion mark by 2030, driven by significant adoption of UPI-based credit lines compared to other on-demand credit products like overdrafts and credit cards.
3 key factors are expected to propel this growth: increasing demand for credit, a shift toward digital payments, and advancements in credit discovery, activation, and utilization. Despite India's credit-to-GDP ratio of 40% being among the lowest in emerging markets, with 60% of new credit originations coming from Tier 2 and rural areas, banks struggle to service these areas due to limited visibility and reach effectively. Approximately 45% of household spending in India is digital, encompassing credit cards, debit cards, person-to-merchant (P2M) UPI transfers, net banking, and financing. Zeta estimates that 40% of P2M transactions could shift from direct bank debits to credit, contributing to a substantial increase in UPI volumes. P2M transactions are expected to represent 75% of UPI volumes by 2025, reaching nearly US$ 2.5 trillion by 2030. Of the 800 million credit-eligible Indians, only 180 million are credit-served, with 400 million completely unserved, 160 million underserved, and 60 million new to credit. Zeta highlights that UPI credit lines offer banks access to alternative data sources for assessing creditworthiness, reduce costs associated with managing offline payment channels, and benefit from UPI's interoperability with various repayment modes, lowering default rates.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.
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