#UPI #DigitalPayments #DebtCollection #FintechIndia #UPITransactions #Credgenics #PhonePe #NPCIData #AtmanirbharBharat #DigitalFinance #RBI #UPIGrowth
New Delhi: India’s digital payments ecosystem has reached another milestone, with debt collection agencies emerging as unexpected leaders in UPI transaction volumes for July 2025. According to data from the National Payments Corporation of India (NPCI), these agencies processed transactions worth ₹93,857 crore in the month, underscoring how technology is transforming the country’s debt recovery processes.
The rise is not necessarily a reflection of a surge in consumer debt levels, but rather the widespread adoption of UPI as a repayment channel. Experts say the change is being driven by the platform’s instant, low-cost, and 24/7 payment capabilities, which have made it the preferred option for borrowers and lenders alike.
Digital Debt Repayments on the Rise
India’s consumer debt portfolio has grown steadily amid the post-pandemic economic recovery. Reserve Bank of India (RBI) data shows personal loans now exceed ₹18 lakh crore, reflecting increased demand for credit across segments ranging from housing and automobiles to personal consumption.
However, the growth in UPI-based debt repayments is not being driven by borrowers falling behind, but by financial institutions and collection agencies shifting their repayment workflows online.
Debt recovery firms, once dependent on physical visits and paper-based reminders, are now leveraging app-based notifications, QR code payments, and one-click UPI transactions to make the process faster and less intrusive.
Tech and AI Powering the Shift
The adoption of generative AI technologies is accelerating this change. Platforms can now send personalized repayment reminders, offer flexible payment plans, and even handle self-service dispute resolution—all without the need for human intervention.
One notable example is Credgenics’ UPI Collect service, which integrates with payment giant PhonePe. Borrowers receive a direct payment link or notification in their app, allowing them to make repayments with a single tap. The platform also supports partial payments, making it easier for borrowers to stay on track without financial strain.
This level of convenience, experts say, is helping to reduce collection costs for lenders, improve repayment rates, and even minimize the stigma often associated with debt recovery.
UPI’s Broader Surge
The strong performance of debt recovery transactions comes amid a record-breaking month for UPI overall. In July 2025, the platform recorded 19.47 billion transactions worth ₹25.08 lakh crore, up from 18.39 billion transactions valued at ₹24.03 lakh crore in June.
Within these numbers, person-to-merchant (P2M) payments dominated with 12.38 billion transactions, making up 63.63% of total volume. Person-to-person (P2P) transactions accounted for the remaining share, showing the platform’s dual role as both a retail and interpersonal payment tool.
Industry analysts point out that the inclusion of niche payment use cases—such as loan collections, insurance premiums, and utility bills—has expanded UPI’s relevance beyond shopping and peer transfers. Debt repayments, in particular, are proving to be a fast-growing segment.
Why UPI Works for Debt Collection
Several factors make UPI a natural fit for debt repayments:
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Real-Time Settlement: Borrowers can make instant payments at any time, eliminating delays in clearing dues.
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Ease of Use: With QR codes, payment links, and in-app prompts, no bank visit or manual entry is required.
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Cost Efficiency: UPI payments are either free or incur minimal charges, benefiting both lenders and borrowers.
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Transparency: Payment confirmations are immediate, creating a clear audit trail for both parties.
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Flexibility: Platforms like Credgenics enable partial payments, recurring instructions, and multiple repayment options.
Impact on Borrowers and Lenders
For borrowers, digital repayment options reduce friction, prevent missed deadlines, and make debt management more manageable. For lenders, automation reduces manpower requirements, speeds up recovery cycles, and increases repayment success rates.
Financial inclusion advocates also note that UPI has opened repayment access to rural and semi-urban borrowers, who may lack access to traditional branch-based channels but can operate easily via mobile apps.
The Road Ahead
Industry insiders predict that UPI-based debt recovery will only grow in the coming years, driven by:
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Integration with credit bureaus, enabling faster credit score updates upon repayment.
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Linking repayment schedules with salary accounts, allowing automated deductions on due dates.
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Expansion into BNPL (Buy Now, Pay Later) and micro-lending repayments.
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Cross-border repayment options as UPI’s international reach expands.
While challenges remain—such as ensuring data privacy, preventing fraud, and balancing repayment reminders with borrower experience—most agree that the shift from manual to digital collections is irreversible.
Conclusion:
July 2025’s data highlights a clear trend: debt collection is no longer just a back-office process but a technology-driven, customer-friendly service. With UPI as its backbone and AI as its accelerator, India’s repayment ecosystem is evolving rapidly, promising a future where debt recovery is faster, cheaper, and more humane.
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