Zeta, a leading banking technology firm, predicts that Unified Payments Interface (UPI) credit lines could exceed $1 trillion in transaction value by 2030. This innovative credit line provides 80% of pre-approved, inactive credit customers on the UPI network with instant access to credit. Since its inception in August 2016, UPI has experienced rapid growth, reaching 1 billion monthly transactions within just over three years and hitting 13 billion transactions in April 2024 alone. Zeta anticipates that UPI’s adoption of credit lines will drive it to the $1 trillion milestone by 2030, outpacing other on-demand credit products such as overdrafts and credit cards.
Three key factors are expected to fuel this growth: rising demand for credit, a shift toward digital payments, and improvements in credit discovery, activation, and usage. Despite India’s relatively low credit-to-GDP ratio of 40% compared to other emerging markets, with 60% of new credit originating from Tier 2 and rural areas, banks face challenges in effectively servicing these regions due to limited visibility and reach. Currently, about 45% of household spending in India is conducted through digital means, including credit cards, debit cards, person-to-merchant (P2M) UPI transfers, net banking, and financing options. Zeta estimates that 40% of P2M transactions could transition from direct bank debits to credit, leading to a significant rise in UPI volumes. By 2025, P2M transactions are projected to make up 75% of UPI volumes, potentially reaching nearly $2.5 trillion by 2030. Out of 800 million credit-eligible Indians, only 180 million currently have access to credit, leaving 400 million entirely unserved, 160 million underserved, and 60 million new to credit. Zeta points out that UPI credit lines offer banks the advantage of accessing alternative data for evaluating creditworthiness, lowering costs associated with managing offline payments, and benefiting from UPI’s interoperability with various repayment methods, which helps reduce default rates.
