Zeta Unveils Revolutionary Stack for Credit Lines on UPI

Zeta, backed by Softbank, launches credit lines on UPI, anticipating a trillion-dollar market by 2030, reshaping digital banking. Their innovative solution aims to capture 50% of this market, revolutionizing digital banking with scalable infrastructure.

Swati Dayal
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Zeta, a Bengaluru-based banking software Startup backed by Softbank, has introduced a cutting-edge stack tailored for running credit lines on the Unified Payments Interface (UPI) platform. Anticipating a monumental shift in the credit market, Zeta forecasts that by 2030, the credit market on UPI could soar to a staggering trillion dollars, with the company aiming to spearhead approximately 50 percent of this market through its innovative product.

This development marks a significant stride in Zeta's mission to empower its bank clientele in facilitating seamless digital origination, distribution, and collection processes.

“Banks have pre-approved credit for millions of customers but are unable to distribute loans to them efficiently," Zeta said in a statement on Friday, adding that credit products that leverage the credit line on UPI scheme would allow “consumers to borrow precisely how much they need, when they need it".

The company that has so far raised more than $340 million from investors including SoftBank and Mastercard, and was last valued at $1.45 billion when it raised $250 million in May 2021.

Addressing the Need for Scalable Banking Infrastructure

Ramki Gaddipati, CEO of Zeta's Asia Pacific region and global CTO, emphasized the imperative for robust banking infrastructure capable of accommodating the burgeoning UPI volumes, both in terms of transactions and potential credit lines.

Gaddipati said, "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. We have pre-architected our solution for this from Day 1."

UPI's Meteoric Rise and Its Impact

With UPI processing over 13 billion transactions in April alone, its exponential growth has underscored the need for adaptive banking solutions. The introduction of credit lines is poised to catalyze further transactional activity within the ecosystem, potentially amplifying the strain on traditional core banking solutions utilized by financial institutions.

Zeta's Integral Role in the Banking Sphere

Zeta has spent over $360 million in building its global banking platform, the company said in its statement, adding that it has partnered with a dozen banks.

Zeta, renowned for its cloud-based banking software solutions, has emerged as a pivotal player in facilitating seamless digital banking experiences. Apart from core banking solutions, Zeta provides debit and credit processing services, along with a myriad of digital solutions tailored for banks and financial institutions. Notably, Zeta's collaboration extends to prominent entities such as HDFC, RBL, IDFC First, and Kotak Mahindra.

The Crucial Role of UPI in Trade and Business

UPI's versatility and convenience have positioned it as the preferred choice for trade and business transactions. With over 10 crore merchant terminals on UPI, compared to less than a crore for card terminals, its ubiquity underscores its pivotal role in shaping India's digital payment landscape.

Navigating Real-Time Challenges

Despite its real-time nature, UPI faces challenges in accommodating potential surges in credit line transactions. Banks are actively preparing to enable credit lines for customers, leveraging pre-sanctioned offers linked to their savings or current accounts.

Gaddipati views the advent of credit lines on UPI as a transformative opportunity to revolutionize credit inclusion in India. By facilitating credit access at the point of need, this innovation promises to redefine the discovery, access, and cost dynamics of retail lending, potentially reshaping the financial landscape.

Zeta's Growth Trajectory

Founded in 2015 by Gaddipati and serial entrepreneur Bhavin Turakhia, Zeta has exhibited remarkable growth, reporting a net profit of Rs 22 crore and revenue of Rs 816 crore in FY23. With substantial investments from industry giants like Softbank and Mastercard, Zeta continues to chart an ambitious path toward digital innovation and financial empowerment.

As Zeta pioneers the integration of credit lines into the UPI ecosystem, it heralds a new era of accessibility and efficiency in India's digital banking landscape, poised to unlock unprecedented opportunities for financial inclusion and growth.

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