How to make a UPI payment despite insufficient balance in account?


Unified Payments Interface (UPI) has become an integral part of our daily transactions. By using internet banking and linking it to the UPI account, it is easy to make payments within seconds.

Several users and businesses have shifted to UPI payments due to easy transaction and process. Till now, you could only carry out UPI transaction if there was sufficient balance in your bank account or UPI wallet. But now, a UPI payment can be made despite insufficient balance in your account.

According to NPCI, payments above <span class=
According to NPCI, payments above 2,000 made using UPI network will bear a surcharge or interchange fee of up to 1.1%.(Shutterstock)

What RBI said

On September 4, the Reserve Bank of India issued a circular expanding the scope of UPI payments by enabling transactions to or from pre-sanctioned credit lines at banks.

“Under this facility, payments through a pre-sanctioned credit line issued by a Scheduled Commercial Bank to individuals, with prior consent of the individual customer, are enabled for transactions using the UPI System”, the RBI statement said.

“Banks may, as per their Board approved policy, stipulate terms and conditions of use of such credit lines. The terms may include, among other items, credit limit, period of credit, rate of interest, etc”, the central bank added.

UPI Pay Later

UPI Pay Later is basically a feature that allows users to spend from pre-sanctioned credit and pay later through UPI transactions. As of now, HDFC Bank and ICICI Bank have unveiled this feature called HDFC UPI Now Pay Later and ICICI Pay Later respectively. The feature works on Google Pay, Paytm and PhonePe applications.

How does it work?

After getting the user’s consent, the bank sets up a credit line. There is a credit limit set by a bank. The user can spend the credit and settle the dues within the deadline.

HDFC & ICICI Bank set up credit line

HDFC Bank has started its ‘UPI Now Pay Later’ scheme. According to the bank’s official website, this feature is offered to HDFC Bank account holders which can be utilised via all the UPI apps. The user gets a credit limit of up to 50,000 with maximum credit period up to 6 months.

The ICICI Pay Later facility enables users to get up to 45-day instant digital credit. The user can pay bills, shop online and pay to any merchant UPI ID instantly. According to the bank’s official website, the customers will be charged one time activation fees of Rs. 500 plus GST . A service charge of Rs.75 + applicable taxes is levied on every Rs. 3000 of monthly spent from the ICICI Bank​​​​​ PayLater account.

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