Get ready for the future of UPI: Two banks have introduced the “UPI now, pay later feature.”

After the Reserve Bank of India (RBI) made some changes to how we use UPI, a few banks have now made it possible for UPI users to do something new. The RBI, on September 4th, said that we could now use our credit lines from banks to pay through UPI, along with our regular bank accounts.

Here’s how it works: Let’s say you have a pre-approved amount of money you can spend, and you agree to it. With this credit line, you can use your UPI app to pay for things even if you don’t have money in your regular bank account. Later on, you’ll need to pay back the bank, just like you would with a credit card. Some banks might charge you interest for the time it takes to pay them back. But some banks are kind and give you a 45-day period where you don’t have to pay any extra money, kind of like a “buy now, pay later” deal.

HDFC Bank and ICICI Bank are two banks that have started offering this PayLater feature through UPI. HDFC Bank makes a new account for you when you activate PayLater on your UPI app. You can use this account to pay merchants, but you can’t use it to send money to other people.

ICICI Bank also offers PayLater, giving you 45 days to pay for things like bills, online shopping, and payments to merchants. They’ll take the money you owe them from your ICICI Bank savings account. Just remember, you can’t use this for credit card payments or to send money to other banks.

So, what’s different now? Well, before, you could only use UPI with your regular bank account, overdraft account, prepaid wallets, or credit cards. But now, you can also use a pre-approved credit limit, like ₹50,000, to make payments through UPI. You can do this even if you don’t have enough money in your regular bank account or mobile wallet. It’s a bit like having a credit card, but you don’t actually need a physical card for it.