 United Payment Interface, UPI, is a term that was unheard or unbelieved until April 2016. But today, UPI is the flag bearer of ongoing financial revolution. Who would have ever imagined a robust, cash-based economy like India would have a massive influx of digital payments? From street hawkers to fancy showrooms, a large section of our society has adapted to UPI. UPI is a digital system that brings together several bank accounts into one common mobile application. Through this app, you can make real-time fund transfers or instant payments from the comfort of your smartphone. All you need is the mobile number of the receiver or their virtual payment address, which is simply the UPI ID. UPI transactions are growing as the broader economy flourishes. The COVID-19 pandemic catalyzed the momentum of adopting digital payments across the country. More banks have been brought into the UPI ecosystem and volume of UPI transactions are also on a steady rise. As per the data from National Payments Corporation of India, the total number of active Indian banks on UPI network was 338 in July 2022. According to a cyber-economic research analysis in India, instant payments yielded an additional cost savings of US$12.6 billion in 2021, the same aided unleashing of US$16.4 billion of India's economic output or 0.56% of India's GDP. It is forecasted that by 2026, an additional US$45.6 billion or 1.12% of India's GDP will be boosted by UPI payments. One thing is crystal clear, the future of money is digital. India's mass success of UPI is a global case study. India's role as a global leader in digital payments is well-established and booming. What could be the next big financial evolution in India? Read it on UPI. Right now, there are three ways in which you can make UPI payments. Method 1. You link a bank account to a UPI app and scan a QR code. Enter the PIN and the money gets transferred immediately. Everything about this is free. Neither you or the shopkeeper has to pay anything for the convenience. Being free really gives a fill up to UPI payments. Method 2. You load up a prepaid wallet such as Paytm and use that to scan a QR code when you wish to make a payment. Method 3. If you have a rupee credit card from certain banks, you can simply link that to your UPI and pay on credit. You don't need the physical card to make the transaction. Now, typically when you swipe a card at a store, the merchant has to pay a fee to the bank. But, since rupee is made in India product that competes against Visa and Mastercard, it's got some leeway. So, if the transaction value is less than 2000 rupees, there wouldn't be any fees either. Put all this together and you get the UPI phenomena of 36 crore transactions each day and it's getting bigger and bigger. In February 2021, UPI had just 11% share in all kinds of detailed payments. But by February 2023, it commanded 22% and in the month of March, it hit a record high of 14 lakh crore rupees in value terms. So you can see why the RBI is constantly thinking of ways to revolutionize it further, capitalize on its feature and goodwill and recently they made a massive announcement. They want to introduce Method 4, a direct credit line on UPI. We are not talking about a credit card linked to UPI but a direct loan from a bank that can be used for payments on these apps. What this means is, if you don't have a credit card and still want a short-term loan to make UPI transactions, it could be very much possible. Banks don't need to worry about costs and hassles to issue physical credit cards. Instead, they can simply create a pre-sanctioned loan limit for you. It could be based on your relationship with them or maybe some other form of data analytics to check if you are credit worthy or not and then they will allow you to draw down a small loan when you want to buy something on the credit. Merchants don't need expensive swipe machines either to accept credit-based transactions. Just the regular QR code will do and certainly it will give a booster dose to financial inclusion. Just think about this. How many of 26 crore users of UPI will have a credit card? Probably not the big majority. But now, banks can easily tap into this network and open up small credit lines. It could spur consumption, help people recover from financial setbacks, come in handy for an emergency and basically improve their quality of life.