UPI’s New Superpowers: UPI’s arc in 2025 is about credit and convenience—not just pay-now. The RBI has allowed pre-sanctioned credit lines to be used on UPI; NPCI has productized it as Credit Line on UPI. RuPay credit cards can be used on UPI QR at merchants; UPI-ATM brings cardless cash at participating ATMs; UAE shops now accept Indian UPI apps via NIPL partners; and the e-rupee (CBDC) pilot for the public continues under the RBI. This explainer assembles only RBI/NPCI/PIB (and select primary partners) so you can adopt the features with confidence—and quote accurately in your newsroom or boardroom.
Credit Line on UPI—what RBI actually allowed, and how NPCI implemented it
The permission
On September 4, 2023, RBI formally expanded UPI’s scope to include pre-sanctioned credit lines at banks as a funding source. Practically, that means a bank can approve you a revolving credit line, and you can scan a UPI QR and pay from that line—not just from deposit balances. (Circular: RBI/2023-24/58 CO.DPSS.POLC.No.S-567/02-23-001.)
The productization
NPCI’s Credit Line on UPI package turns the RBI permission into APIs and rules for member banks/wallets. It targets low-ticket, high-volume merchant payments and supports collections, spends control, and repayment flows aligned with UPI.
Takeaway: If your bank offers a “UPI Credit” or “pre-sanctioned line on UPI”, you can pick that account in your UPI app just like a savings account and pay at any UPI QR. (Law firms and reg-tech trackers summarize the same RBI circular if you need a quick citation.)
RuPay credit on UPI—swiping a QR with your credit card
RBI first enabled RuPay credit cards to be linked on UPI, making credit at QR a reality. This turned many QR-only small merchants into card-accepting merchants for RuPay users—without POS machines.
MDR / fees context (official): The Government/PIB note confirms the pro-digital policy on fees: zero MDR for RuPay Debit and BHIM-UPI (PPI/exceptions aside) via amendments since Jan 2020; NPCI also references UPI P2M MDR slabs in its schedules. Always rely on PIB for the headline policy stance.
Media coverage in Nov 2025 shows RuPay’s credit share growing faster because of UPI routing; treat those numbers as context, but anchor policy and capability to RBI/NPCI.
UPI-ATM = ICCW (Interoperable Cardless Cash Withdrawal)
UPI now does cardless cash. At a UPI-ATM/ICCW machine, select UPI Cash Withdrawal, enter amount, scan the QR in your UPI app, and authorize with your UPI PIN—cash is dispensed without a card. NPCI’s NFS page documents the feature; member communications show the flow in the wild.
Related: NPCI also enabled cash withdrawal at Business Correspondent (BC) micro-ATMs via UPI—useful for rural cash-out. (OC No. 225, Oct 7, 2025.)
Cross-border UPI in the UAE—what’s live (and who powers it)
Through NIPL partnerships, Indian UPI apps can be used across a growing list of UAE merchants. A Mashreq/NEOPAY announcement (Mar 2024) is one foundational tie-up; India’s public broadcaster highlighted further partner expansion (Network International, Magnati etc.) in 2025. If you’re traveling, check your app’s UAE banner and supported categories before you go.
UPI “plumbing” you should actually care about (2025)
- Settlement housekeeping: NPCI introduced changes to segregate authorized vs dispute settlements in daily cycles (OC 222A, FY 2025-26). It’s back-end plumbing for banks/TPAPs, but it helps timely settlement on busy days. (See NPCI circulars index; trade explainers summarize the shift.)
- Reserve Pay / Single-Block Multiple Debits (SBMD): Enhancements landed in Oct 2025; pricing references explicitly point to existing slabs for RuPay credit on UPI and Credit Line on UPI. Useful for hotel/car holds and escrow-like flows.
- UPI Lite & Lite X (offline): UPI Lite supports small, PIN-less spends; Lite X adds offline capability (send/receive without internet) for patchy-network zones. Check your app’s version and bank support.
CBDC retail (e-rupee): where the RBI pilot stands in 2025
Status: The e₹ (retail) pilot has been live since Dec 1, 2022; RBI publishes an official FAQ explaining how banks/non-banks onboard users and issue e-rupee wallets. In 2025, press coverage noted balances in circulation rising (₹1,016 crore by Mar 2025) and RBI exploring cross-border pilots next—treat media numbers as context, and the FAQ as the baseline.
Ecosystem signal: Fintech/merchant rails are beginning to adapt—e.g., a Reuters report covered a CBDC-related acquisition to enable merchant acceptance plumbing. It shows where e₹ may surface first (bill pay/merchant).
Merchant & user checklists—how to actually use the new features
For consumers
- Link a credit line on UPI: If your bank offers it, look for “UPI Credit/Line” in your UPI app’s “Add account” flow; accept T&Cs and set spending controls. (The RBI circular enables it; your bank must activate it.)
- Use RuPay credit at QR: Add RuPay credit card in your UPI app (where supported). Select “Credit” account at checkout to enjoy card benefits at QR-only merchants. (Policy roots via RBI; operational rails via NPCI.)
- Withdraw cash with UPI-ATM: At marked ATMs, pick UPI Cash Withdrawal, scan QR, confirm in app, collect cash—no card required.
- UAE travel: Ensure your app supports UAE merchants; look for NIPL/NEOPAY signage at checkout.
- Try UPI Lite (and Lite X offline): Enable Lite for quick sub-₹1,000 spends; Lite X for low-connectivity zones.
For small merchants
- Accept credit at your QR: If you see RuPay Credit on UPI or Credit Line on UPI transactions hitting your QR, understand how your MDR (if any) applies in your category; keep an eye on NPCI/risk circulars. Use PIB as your source for zero-MDR policy on RuPay Debit/BHIM-UPI.
- Cash-out option: If you’re a BC outlet, NPCI has enabled UPI cash withdrawal at micro-ATMs—check with your sponsor bank.
- Settlement hygiene: Ask your PSP/TSP how the segregated settlement cycles affect your end-of-day cash flow; many TSPs have upgraded dashboards.
For founders/fin-ops teams
- Add SBMD/Reserve Pay for pre-auth flows (hotels/car rentals); confirm pricing applicability from OC 228 (Oct 8, 2025).
- Plan UAE acceptance if you serve Indian travelers—work with NIPL partners (NEOPAY, Network International, Magnati).
- CBDC watch: Keep an eye on RBI circulars as cross-border pilots emerge; merchant enablement could ride existing BBPS/UPI pipes.
Fees & MDR—what’s actually on the record
- RuPay Debit & BHIM-UPI: Zero MDR since Jan 2020 via notified amendments (Government/PIB).
- UPI P2M (general): NPCI publishes MDR slabs and category carve-outs; TPAPs/TSPs implement per contracts—check your PSP’s schedule. (Circular index reference.)
- RuPay Credit on UPI & Credit Line on UPI: Where MDR applies, it follows NPCI pricing guidance; see Reserve Pay/SBMD OC note explicitly carrying pricing references forward.
Tip: Don’t rely on viral charts for MDR; use PIB + NPCI OCs + your bank’s merchant T&Cs.
Security: how these features stay safe
- Same UPI rails: Credit lines and RuPay credit on UPI inherit UPI’s authentication—device binding, app PIN, UPI PIN, and risk checks. (NPCI product pages/circulars.)
- Cardless cash security: UPI-ATM/ICCW embeds account-holder authorization in-app; the ATM never sees your card/PAN. (NFS/NPCI.)
- CBDC wallets: RBI’s e₹ retail FAQs clarify issuance by banks/non-banks and wallet onboarding; treat SMS links carefully and use official bank apps only.
Values in payments: the ethic behind the rails
Trusted money needs trusted conduct
Payment systems are code, but trust is culture: transparent pricing, honest disclosures, on-time wages, and care for customers when errors occur. When merchants don’t inflate bills to offset fees and teams document issues truthfully, the whole network performs better—fewer disputes, faster settlements, calmer customers.
For a values-first lens that emphasizes truthful work, non-exploitation and responsibility in everyday life and at work, explore accessible Sant Rampal Ji Maharaj’s guides like Way of Living (Jeene Ki Raah) and practical notes on ideal behaviour for employers and employees. The habits are simple; the compounding trust is powerful.
Turn on the new UPI features—safely and officially
Your two-week checklist
- Link: Add RuPay credit and (if offered) your UPI credit line in your app.
- Test: Make one ₹100–₹300 QR purchase on credit; review the invoice and MDR note in your merchant report.
- Cash: Try UPI-ATM for a small withdrawal to get comfortable with the flow.
- Travel: If flying to the UAE, verify your app’s NIPL support and accepted stores.
- Learn: Bookmark RBI circular (Sep 4, 2023) and NPCI OCs (OC 228 on Reserve Pay, OC 225 on micro-ATM) to resolve team debates fast.
FAQs: UPI’s New Superpowers & Credit Line on UPI
Q1. What is “Credit Line on UPI” in simple words?
It’s a bank-approved revolving line you can use directly via UPI—scan a QR and pay on credit, not from your bank balance. Enabled by RBI’s Sep 4, 2023 circular; packaged by NPCI as a product.
Q2. How is this different from linking a RuPay credit card to UPI?
RuPay credit on UPI routes your card at QR; Credit Line on UPI routes a bank credit line (not a card). Both show in your app as separate funding accounts.
Q3. What about MDR/fees—do I pay extra?
Consumers typically don’t pay MDR; it’s a merchant-side fee. PIB confirms zero MDR for RuPay Debit/BHIM-UPI; other categories follow NPCI schedules. Ask your PSP/bank for your exact slab.
Q4. How do I withdraw cash with UPI?
Use a UPI-ATM/ICCW: choose UPI Cash Withdrawal at the ATM, scan the QR with your UPI app, authorize with UPI PIN, take cash. Also enabled at BC micro-ATMs per NPCI OC.
Q5. Can I use UPI abroad?
In the UAE, yes at many merchants—thanks to NIPL partners like NEOPAY (Mashreq) and others; check your app’s support list before you travel.
Q6. What’s the status of the e-rupee (CBDC) for the public?
The retail e₹ pilot is ongoing; RBI’s FAQ explains issuance and usage. Media note circulation rose to ~₹1,016 crore by Mar 2025, and RBI plans to explore cross-border pilots—watch RBI for official updates.
Q7. I saw posts about new UPI “settlement cycles”—should I care?
It’s mostly back-office: NPCI has segregated authorized and dispute settlements (from Nov 2025 per OC 222A), helping smoother daily closes. Your PSP should reflect it in dashboards.
