UPI Pay Later services have emerged as a powerful financial tool, offering consumers the convenience of deferring payments on purchases while leveraging the widespread and secure infrastructure of UPI (Unified Payments Interface).
This guide will walk you through everything you need to know about UPI Pay Later services, from understanding how they work, and the benefits they provide, to selecting the right service for your needs.
What is UPI Pay Later
UPI Pay Later is a relatively new payment model within the UPI ecosystem that allows users to make purchases immediately and settle the payment later. This deferred payment option is like the popular Buy Now, Pay Later (BNPL) services but integrated directly into UPI.
UPI Pay Later enables users to manage short-term cash flow better by providing instant credit for UPI transactions without requiring a credit card or bank loan.
How does UPI Pay Later work
UPI Pay Later services function as a line of credit provided by banks or financial service providers. Here is a step-by-step breakdown of the process:
- UPI app download: After downloading and signing up, users apply for UPI Pay Later services through their banking or payment apps. The service provider assesses the user’s eligibility based on their financial profile, credit score, and repayment history.
- Credit limit assignment: Once approved, the provider assigns a credit limit based on the user’s financial profile. This limit is the maximum amount the user can spend through UPI Pay Later transactions within a given period.
- Purchases and transactions: Users can make purchases via UPI using the “Pay Later” option, just like any other UPI transaction. When using UPI Pay Later, the amount is deducted from their credit limit instead of their bank account.
- Repayment: At the end of the billing cycle, users receive a consolidated bill for all transactions made with UPI Pay Later. Payment can typically be made through UPI or other banking methods.
Key benefits of UPI Pay Later services
UPI Pay Later services offer several benefits that can make managing finances easier for users:
1. Instant access to credit
One of the main advantages of UPI Pay Later services is immediate access to credit without requiring traditional credit checks or waiting for loan approvals. This feature is particularly beneficial for those who need quick access to funds for essential or emergency purchases.
2. Flexible repayment options
Most UPI Pay Later services allow users to repay their outstanding balance flexibly. Many providers offer monthly billing cycles, and some even allow users to convert large payments into smaller, interest-free EMIs (Equated Monthly Installments). This flexibility helps users manage their expenses more comfortably.
3. No physical card required
Unlike credit cards or debit cards, UPI Pay Later services do not require a physical card. This eliminates the need for card management, PIN memorisation, or worries about card fraud. Payments are processed directly through UPI, providing a secure and seamless experience.
4. Increased control over cash flow
UPI Pay Later is ideal for those who want to balance their cash flow by spreading their expenses. Instead of waiting for the next paycheck or managing multiple bank accounts, users can manage their daily expenses by using UPI Pay Later and paying at the end of the month.
5. Widely accepted and easy to use
Since UPI is widely accepted across India, UPI Pay Later services can be used at most retail stores, online platforms, and service providers that support UPI. This ease of use makes UPI Pay Later a versatile option for consumers.
Popular UPI Pay Later providers in India
Several banks and financial institutions now offer UPI Pay Later services in India. Here are some leading providers and their unique features:
- ICICI PayLater: ICICI PayLater provides an interest-free credit limit for 30 days, allowing users to repay the balance without incurring additional charges. It is accessible through the ICICI mobile app and provides seamless integration with the bank’s UPI interface.
- HDFC FlexiPay: HDFC’s FlexiPay service offers flexible repayment options and allows users to convert transactions into EMIs. It is ideal for HDFC customers who prefer paying later but need structured EMI support.
- Bajaj Pay Later: Bajaj Pay Later offers a UPI-based Pay Later service that provides instant credit with no collateral required. Known for its user-friendly app, Bajaj Pay Later integrates well with the Bajaj Pay ecosystem, giving users additional benefits and rewards for regular transactions.
- Amazon Pay Later: Although not strictly a UPI service, Amazon Pay Later offers a similar Pay Later option for Amazon purchases and third-party transactions through Amazon Pay. Users can access credit on Amazon and pay later in instalments or a single payment.
- LazyPay: LazyPay is a popular UPI Pay Later service provider that extends credit limits based on user profiles and repayment histories. It also offers a unique “Buy Now, Pay Next Month” feature that is widely used for smaller, everyday expenses.
How to choose the right UPI Pay Later service
Choosing the best UPI Pay Later service depends on your spending habits, repayment preferences, and the benefits offered. Here is a breakdown of factors to consider:
1. Interest rates and fees
Some UPI Pay Later services offer a no-interest period, but if you plan to extend payments, understand any interest rates or fees that may apply. Read the terms carefully to know the consequences of late payments.
2. Credit limit
Evaluate the credit limit you need based on your monthly expenses. Some services provide high credit limits, while others may have a lower threshold. A lower credit limit may suit those with modest needs, while a higher limit could be beneficial for larger purchases.
3. Repayment flexibility
Look for a service that aligns with your preferred repayment method. For instance, Bajaj Pay Later offers flexible repayment options, including EMIs, making it easier for users to spread their payments over several months without financial strain.
4. App and customer experience
A smooth, user-friendly app with good customer support can enhance your experience. Ensure that the provider has a reliable mobile app with helpful features like transaction history, balance notifications, and reminders.
5. Rewards and offers
Some UPI Pay Later services offer cashback, discounts, or rewards for regular usage. Bajaj Pay Later, for instance, provides rewards for frequent users, making it an attractive option for those looking to maximise benefits from everyday transactions.
Tips for managing UPI Pay Later payments wisely
- Set a budget: Since UPI Pay Later functions like credit, it is important to set a spending limit to avoid overspending.
- Use for essentials: Prioritise UPI Pay Later for essential expenses, as it can quickly accumulate if used for non-essentials.
- Make timely repayments: To avoid late fees and potential interest, pay your outstanding balance on time. Many apps offer reminders to keep you on track.
- Check statements regularly: Regularly check your transaction history to stay informed and avoid any unexpected charges.
- Limit usage to one or two services: Managing multiple UPI Pay Later accounts can become complicated. Stick to one or two trusted providers for easier tracking and management.
The future of UPI Pay Later in India
UPI Pay Later is part of the growing trend towards credit-based, flexible spending. With more consumers adopting digital payment options and seeking ways to manage cash flow, UPI Pay Later services are expected to expand rapidly. As competition increases, users can expect more attractive offers, lower fees, and improved user experiences from providers.
Conclusion
UPI Pay Later services offer a convenient, cashless way to manage daily expenses without immediate payment, but they should be used responsibly. By choosing the right provider, such as Bajaj Pay Later for flexible options, and by managing payments wisely, UPI Pay Later can be a powerful tool for balancing your monthly budget and enjoying the convenience of deferred payments.
Whether for emergencies or regular purchases, UPI Pay Later offers an innovative solution to bridge the gap between income cycles and expenses.
