How to Make UPI Payment with Insufficient Balance? | How to Use UPI Pay Later?

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In the ever-evolving landscape of digital transactions, the Unified Payments Interface (UPI) has emerged as a game-changer. This revolutionary platform, backed by the Reserve Bank of India (RBI), has simplified the way we make payments. Until recently, you could only perform UPI transactions if your bank account or UPI wallet had sufficient funds. However, a significant shift occurred on September 4th, when the RBI expanded the scope of UPI payments by allowing transactions even when there’s an insufficient balance in your account. In this comprehensive guide, we will delve into the intricacies of making UPI payments despite a lack of funds, and how this innovative feature works.

The RBI’s Forward-Thinking Move

On that momentous day in September, the Reserve Bank of India took a giant leap forward in enhancing the UPI experience. They issued a circular that broadened the horizons of UPI payments, making it possible to transact through pre-sanctioned credit lines at banks. This move was hailed by the masses, as it opened up new avenues for seamless transactions.

According to the RBI’s official statement, “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.” This announcement marked a paradigm shift in the way we perceive and utilize UPI payments.

Banks, in line with their Board-approved policies, now have the authority to stipulate the terms and conditions for the use of these credit lines. These terms may include essential details such as the credit limit, the credit period, the rate of interest, and more. This newfound flexibility empowers both banks and customers, ushering in a new era of financial convenience.

List of Top 5 Best UPI Payments app in India

According to data from NPCI, the top three UPI Apps, PhonePe, GPay, and Paytm dominate the UPI payment market and processed 96% of transaction volume in India in 2023.


Here are some of the Best UPI apps that you can begin using on your phone right away

  1. Google Pay
  2. PhonePe
  3. Paytm Payment Bank
  4. CRED
  5. MobiKwik

Introducing UPI Pay Later

One of the most noteworthy features to emerge from this RBI directive is UPI Pay Later. This innovative concept allows users to spend from their pre-sanctioned credit lines and settle their dues through UPI transactions. It’s like having a financial safety net that ensures you never miss out on any payment or transaction due to insufficient balance in your account.

Currently, leading banks like HDFC Bank and ICICI Bank have rolled out this feature, respectively named HDFC UPI Now Pay Later and ICICI Pay Later. What sets this feature apart is its compatibility with popular UPI applications like Google Pay, Paytm, and PhonePe, making it accessible to a broad user base.

How UPI Pay Later Works

Understanding the mechanics of UPI Pay Later is crucial to fully utilize its potential. Here’s how it works:

  1. User Consent: The process begins with the user’s consent. Once you agree to avail of this facility, the bank sets up a credit line in your name.
  2. Credit Limit: Every credit line comes with a predefined credit limit. This limit is determined by the bank based on various factors and can vary from one bank to another.
  3. Spending Flexibility: With the credit line in place, you now have the flexibility to make payments and transactions even if your account balance is insufficient. You can use the pre-sanctioned credit as a buffer to cover your expenses.
  4. Settling Dues: It’s essential to settle your dues within the stipulated deadline. Failure to do so may incur additional charges or interest, as per the terms and conditions set by your bank.

HDFC & ICICI Bank set up credit line

HDFC UPI Now Pay Later

HDFC Bank’s ‘UPI Now Pay Later’ scheme is a prime example of how banks are embracing this new feature. According to the official HDFC Bank website, this offering is exclusively available to HDFC Bank account holders and can be utilized through all UPI apps. Users are granted a credit limit of up to ₹50,000, with a maximum credit period of 6 months.

This initiative aims to provide HDFC Bank customers with a convenient financial cushion, allowing them to manage their expenses seamlessly, even when their account balance falls short.

ICICI Pay Later

ICICI Bank’s ‘ICICI Pay Later’ facility offers users a quick 45-day instant digital credit. With this feature, you can pay bills, shop online, and make payments to any merchant’s UPI ID instantly. According to the official ICICI Bank website, customers are required to pay a one-time activation fee of Rs. 500 plus GST. Additionally, a service charge of Rs. 75 plus applicable taxes is levied on every Rs. 3,000 spent from the ICICI PayLater account.

In Conclusion

The expansion of UPI payments to include transactions from pre-sanctioned credit lines is undoubtedly a game-changer in the world of digital payments. Thanks to this forward-thinking move by the RBI, you can now make UPI payments without worrying about insufficient balance in your account.

HDFC Bank’s ‘UPI Now Pay Later’ and ICICI Bank’s ‘ICICI Pay Later’ are leading the way in implementing this innovative feature. With credit limits, user consent, and flexible repayment options, these offerings are set to revolutionize the way we handle our finances.

As the digital payment ecosystem continues to evolve, staying informed about these groundbreaking developments is essential. Now that you understand how to make UPI payments despite an insufficient balance, you can take advantage of this feature to streamline your financial transactions and ensure a hassle-free payment experience.


Q1: What is UPI? A1: UPI stands for Unified Payments Interface. It’s a digital payment system in India that allows instant money transfers and payments through a mobile app.

Q2: Can I use UPI Pay Later for online shopping? A2: Yes, UPI Pay Later can be used for online shopping. It provides a convenient way to make online payments, even when your account balance is low.

Q3: Are there any interest charges with UPI Pay Later? A3: Interest charges may apply, depending on your bank’s terms and conditions. It’s essential to review the specific terms and fees associated with UPI Pay Later from your bank.

Q4: How do I check my UPI Pay Later credit limit? A4: You can typically check your UPI Pay Later credit limit through the UPI app provided by your bank. Look for the credit limit section in the app for this information.

Q5: Is UPI Pay Later secure for transactions? A5: Yes, UPI Pay Later is designed with security in mind. It uses encryption and authentication measures to protect your transactions. However, always practice safe banking habits, such as safeguarding your account details and not sharing sensitive information.


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