The Unified Payments Interface (UPI) has really transformed the payment landscape in the country, benefiting both everyday people and businesses alike. A recent study highlights how UPI is a true game changer. It points out that in just a short time, UPI has significantly boosted the use of digital payments all over India, from local street vendors to big shopping centers.
Widespread access
Since launching in 2016, UPI’s reach has been growing daily. Now, around 300 million people and 50 million merchants are enjoying smooth digital transactions. What’s particularly interesting is that UPI has also made it easier for those with low credit scores to access loans. The study reveals that in areas where UPI is most popular, new borrower loans have jumped by 4%, while loans to high-risk individuals have surged by 8%.
Big gains for fintech
According to this report from professors at the Indian Institute of Management (IIM) and the Indian School of Business (ISB), fintech companies are reaping the biggest rewards from UPI’s rise. They’ve ramped up their loan volumes by at least 77 times, far surpassing traditional banks. The cool part is that while UPI loans have increased, the rate of defaults hasn’t gone up.
Better loan access
The findings show that loans taken through UPI are being repaid on time. Thanks to the straightforward repayment process, borrowers are keeping up with their payments, which has kept default rates low. The research team also pointed out that UPI’s adoption has been a key factor in boosting loan growth. They noted that a 10% rise in UPI transactions corresponds to a 7% increase in loan availability, illustrating how digital finance is simplifying life for both borrowers and lenders.
