Zeta launches software stack for UPI credit line

Zeta founders Ramki Gaddipati (left) and Bhavin Turakhia)

Softbank-backed banking software company Zeta has launched a stack to run credit lines on the popular Unified Payments Interface (UPI) digital payments platform.

The Bengaluru-based company expects the credit market on UPI to grow to a trillion dollar by 2030. Zeta expects to process around 50 percent of the market with the product that would help the company service its bank customers to originate, distribute and collect digitally.

“We saw UPI volumes put a strain on core banking systems. We anticipate similar volumes on credit line on UPI before long, and this calls for population-scale banking infrastructure, capable of processing hundreds of millions of credit accounts,” said Ramki Gaddipati, CEO of Asia Pacific region and global CTO of Zeta. “We have pre-architected our solution for this from Day 1.”

UPI, which allows users to transfer money across multiple banks, processed more than 13 billion transactions in April. The growing volume has put a strain on the core banking solution (CBS) of banks. The introduction of credit lines is likely to further fuel more transactions on the ecosystem.

Zeta provides cloud-based banking software solutions including core banking solution (CBS), debit and credit processing apart from various digital solutions for banks and other financial institutions.

Zeta runs HDFC’s payment and ecommerce app Payzapp and works with banks such as RBL, IDFC First and Kotak Mahindra.

UPI is popular for trade and business as QR codes make payments easier at merchant terminals. While there are only less than a crore card terminals, there are more than 10 crore merchant terminals on UPI.

The real-time nature of UPI poses a challenge if the credit line takes off in a big way, banks have been saying.

According to the company, the banking ecosystem has to be ready to experience a hockey-stick kind of growth in the credit line on the UPI scheme. Banks are starting to enable credit lines for customers with pre-sanctioned offers linked to their savings or current accounts.

“This is a once-in-a-generation opportunity to change the credit-inclusion landscape in India. By delivering credit at the point of need, credit line on UPI has hit a home run for banks by completely changing the discovery, access, and cost mechanics of retail lending,” Gaddipati said.

Zeta reported a net profit of Rs 22 crore and revenue of Rs 816 crore in FY23, according to the figures available on the Registrar of Companies (RoC) website. The company is privately held and the FY24 revenues are not public yet.

Founded by Gaddipati and serial entrepreneur Bhavin Turakhia in 2015, the company has raised $340 million from investors, including Softbank and Mastercard.