How Startups Can Leverage UPI to Scale Quickly

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Ahmed Mainul
Ahmed Mainulhttps://www.hospitalitycareerprofile.com
Ahmed Mainul (Mainul Mondal) is a seasoned journalist with extensive experience in hospitality news, executive appointments, biographies, and industry updates. Having worked with reputed hotel brands like Marriott, Taj, and others, he brings a wealth of industry knowledge to his writing. His deep understanding of the hospitality sector and his commitment to delivering insightful stories make him a trusted contributor to Hospitality Career Profile
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In a recent Expert Edge AMA session hosted by Shine.com, we had the privilege of interacting with Vishesh Jhol, Head of Startups at PayU. Vishesh shared his expert insights on the transformative impact of UPI (Unified Payments Interface) on India’s business landscape. Here are the key highlights from the conversation.

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1. UPI’s Three Waves of Transformation

In the first wave, it was really the fintechs, like PhonePe and Google Pay, that took off and enabled ease of use and seamless payments for everyone. The second wave saw focused fintechs like Navi and CRED scaling up. Now, the third wave is about credit on UPI, which is not just going to increase the adoption of UPI but also the offtake of credit in India. Retail credit is anyway growing, and with low credit card penetration in India, this third wave could be a game-changer for startups.

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2. UPI’s Low-Cost Structure: A Boon for Startups

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How does the low-cost structure of UPI benefit startups? UPI’s low-cost transaction structure helps startups reduce their cost of payments. For example, PhonePe, the largest UPI processor, has over 90% of its transactions happening through UPI. This low cost enables startups to scale much faster and creates a healthier P&L for them. Mandates that you create reduce the churn for startups and consumer applications. It allows them to interact with users more effectively, especially with the introduction of credit lines on UPI.

3. Credit on UPI: The Third Wave for Startups

Credit on UPI is a massive space. There’s very low credit card penetration in this country. Less than 3-4% of people have credit cards. There is huge scope to disrupt this space. Imagine you’re standing at a store, and as soon as you want to purchase something, you get a tailored credit offer instantly on your phone. That kind of ease and interaction with the banking infrastructure can happen through UPI and credit. With retail credit increasing at more than 16% CAGR, systems are getting ready to offer innovations like sashay-sized credit, low-cost EMIs, and tailored offers based on a customer’s credit history. This presents a massive opportunity for startups to innovate.

4. UPI Scalability: Unlocking Growth for Startups

UPI’s scalability is a major enabler for startups. UPI provides massive scale for consumer applications by making transactions seamless. Earlier, you’d either pay through your bank or load a card, but now startups can reduce the cost of payments for their users, which attracts more transactions and improves retention.

5. Building Customer Trust: Addressing Security Concerns

Vishesh acknowledged common fears about digital payments during the conversation. He said, a lot of people fear UPI because they think it’s prone to fraud. But in India, we have two-factor authentication. Unless you’ve selected a payment and entered your PIN, no one can pull that money out.

He also advised startups to educate their users on safe practices. They should advise their users not to transfer money directly to a UPI ID unless you know the person or business well. Instead, rely on payment aggregators or secure websites. If a product isn’t delivered, users can always raise a chargeback request with their bank.

Practical Advice for Startups

When asked what advice he would give to startups looking to scale with UPI, Vishesh said: “Right now, the credit line on UPI is the space to focus on. The ecosystem is getting ready for innovations that can unlock massive potential, not just in terms of consumer demand but also in building credit files for customers who don’t have access to formal credit today.”

He also emphasized adaptability: “Startups want you to do multiple things at the same time. You need to think like an entrepreneur. Learn about engineering, product, sales, and operations—whatever it takes to solve problems and scale quickly. Your skill set is your ability to learn and adapt.”

Future Innovations to Watch

According to Vishesh, startups should keep an eye on innovations like cross-border UPI payments: “India receives $125 billion in inward remittances annually at a 6% cost. If UPI can reduce this cost, it would revolutionize space. Imagine sending money as easily as sending a message. That’s the kind of impact UPI can have.”

The session with Vishesh Jhol highlighted how UPI is not just a payment system but a powerful tool for startups to scale quickly and efficiently. From low-cost transactions and credit innovations to building trust through security, UPI offers endless opportunities for startups willing to leverage its potential. Watch the whole conversation.

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