The Unified Payments Interface (UPI) constituted a staggering 75% of the retail digital payment volume in India and clocked 8.7 billion transactions worth ₹14.1 trillion in March 2023. This highlights the rapidly growing influence of UPI in the country’s financial landscape along with the trust and reliance that it brings to digital payments in the country.
The Reserve Bank of India (RBI) has opened new avenues for the delivery of credit products via electronic payment methods by approving the use of RuPay credit cards on UPI. Recently, the transfer of money between pre-approved credit lines and UPI ID was allowed, opening up a new way for lenders to finance borrowers using bank credit. This introduction of credit on UPI has the potential to democratize credit access, benefiting people without a credit history or high credit scores, small and medium-sized businesses, new-to-credit consumers, and the rural segment.
The entry of UPI mode into the credit market promises quicker and simpler access to capital. An underlying strong collections infrastructure is also essential given how quickly digital lending is evolving and growing. Newer methods of digital debt collection can also help when payments are growing on the channel. UPI will act as a preferred platform to create a more effective digital collection channel and enable faster repayments. This blog explores how lenders can leverage UPI for debt collections in India.
How does CG Collect’s UPI Collect capability ensure safer and faster collections?
UPI has already revolutionized digital payments, offering retail consumers seamless digital transaction capabilities. This transformation holds significant implications for debt collections.
With UPI expanding as a lending channel, it is only logical that it will also become a prominent channel for collections.
Credgenics’ CG Collect mobile app has transformed field debt collections by offering a streamlined digital solution for lending businesses. It has now introduced UPI Collect to make it easier for retail borrowers who struggled to make digital payments via links, bank transfers, or QR codes to do so quickly and correctly through their preferred UPI mode. The digital footprint that these transactions leave behind will enable lenders to track the payments effectively and respond appropriately in the event of additional defaults or delinquencies. Given the specifics of transfers being made and the amount of the collections being verified and submitted via CG Collect, this will also shield the borrowers from hard nudges and reduce the regulatory compliance risks for lenders. Agents can send payment requests, while updating door-step recoveries on the FOS app, to borrowers’ UPI apps.
How does this work?
- The field agent sends the UPI Collect request to a validated VPA address (UPI ID) and the customer receives the notification on the respective UPI app
- After receiving the request, the user makes the payment using their bank account, PPI wallet, or UPI.
- The CG Collect app instantly updates the payment status.
- The lender receives the money directly into their account, which reduces time on money transfers and reconciliation problems.
Figure: CG Collect’s latest feature UPI Collect – for faster field debt collections
Benefits of UPI-based payments on CG Collect for field debt collections teams:
Integration of credit into collections
The lenders will be able to segment the borrowers and target them with collections strategies at reduced costs and time by using the relevant digital repayment data from the FoS app in conjunction with Credgenics’ advanced analytics platform. This will further help the lenders recover the debts more effectively.
Ease of Payments:
UPI simplifies the repayment process, allowing debtors to make payments instantly and securely using their mobile phones. This ease of use promotes timely payments.
Real-time Transactions:
Transactions via UPI are processed in real-time, providing immediate confirmation of payments to the lenders. This transparency reduces disputes and enhances trust between creditors and debtors.
Low Transaction Costs:
In comparison to conventional payment methods or card-based payments, UPI transactions typically have lower fees, which reduces the overall cost of debt collection.
Broad Accessibility:
UPI is widely adopted in many regions, making it accessible to a large portion of the population, including those without access to traditional banking services. With
759 million active internet users in India, and with the rise of digital channels for communications and payments, UPI will serve as an alternate medium for debt collections.
Seamless Integration:
UPI has been integrated into digital debt collection platforms and Credgenics Billzy Payment, allowing creditors to automate payment reminders and follow-ups, streamlining the collections process.
Enhanced Tracking and Accurate Reconciliation:
UPI transactions offer detailed transaction history, enabling better tracking and reconciliation of payments, reducing errors, and improving accounting accuracy.
Robust Security:
UPI utilizes strong security measures, such as multi-factor authentication, ensuring a secure choice for financial transactions and reducing the risk of operational fraud. Additionally, with Credgenics CG Collect OTP verification, verified visit statuses are documented and can serve as legal evidence. NEFT / IMPS / UPI submissions cannot proceed without manager approval, thereby enhancing security. Each agent’s collection limits are set by managers, adding to the security measures.
Conclusion:
In conclusion, UPI credit is poised to have a transformative impact on India’s financial ecosystem. While it presents new opportunities for financial inclusion, operational efficiency enhancement, and the overall growth of the digital economy, it also opens up newer avenues for digital collections models. The advent of UPI credit promises to revolutionize debt collections in India, providing a digital medium for lenders to streamline operations and enhance their collections strategies. As UPI continues to evolve, it will undoubtedly play a pivotal role in reshaping the future of credit and debt collections in the country.
To witness the power of UPI Collect through CG Collect in revolutionizing your debt collections, request a demo today!
If you are looking to transform your debt collections strategy with the power of digital and data-powered insights, reach out to us to request an exploratory session at sales@credgenics.com or visit us at www.credgenics.com
