Prosus-owned fintech firm PayU is preparing to broaden its consumer-credit business beyond checkout financing by exploring credit lines on the Unified Payments Interface (UPI), including a potential partnership with a bank to offer RuPay credit cards. According to CEO Anirban Mukherjee, the company's assessment remains at an early stage, with PayU preferring direct participation if its non-banking financial company (NBFC) is allowed to offer the product. Under current Reserve Bank of India (RBI) rules, only scheduled commercial banks and select small finance banks—not NBFCs—can originate pre-sanctioned credit lines on the UPI network. However, Mukherjee revealed that "The RBI is considering, selectively, whether larger NBFCs can participate in credit lines on UPI. If that happens, PayU would be happy to participate. It is a powerful product. A customer could receive, for example, a ₹50,000 credit line and repay it over six months while using it at multiple merchants."
The expansion comes after PayU's lending business turned profitable, with its credit business comprising LazyPay, consumer lending and merchant lending reporting revenue of $204 million in FY26, up 19% from $171 million a year earlier. As reported by Mint, the business posted an EBITDA of $6 million, compared with a loss of $28 million in FY25. On the payments side, including its payment gateway business, revenue rose 10% to $577 million in FY26 from $523 million a year earlier, with payments EBITDA improving to $12 million from $3 million in FY25. Mukherjee attributed the improvement largely to a deliberate exit from lower-margin business, even as PayU expanded payment-processing volumes.
India remains a credit-constrained market with RBI data showing the number of active credit cards crossed 120.45 million in May, with total spending reaching ₹2.03 trillion. According to Mint reports, credit-card penetration works out to only about 5-8% in a country of roughly 1.45 billion people. The central bank has indicated demand for small-ticket personal loans has grown rapidly, rising by around 20% by fiscal year 2026 (FY26), with digital NBFCs accounting for 19% of sanction value and 80% of sanction volume in the first half of FY26. Mukherjee emphasized that "Credit lines on UPI could be safer than some unsecured credit products because the lender knows the end use, can monitor transactions and can continuously re-underwrite the customer."
PayU has increased its stake in Mumbai-based digital payments infrastructure firm Mindgate Solutions to 70%, giving it majority control of a company that works with banks on UPI and real-time payments infrastructure. As reported by Mint, the investment would help PayU evolve beyond a merchant-facing payments company into a broader financial infrastructure provider. Mindgate Solutions develops digital payments infrastructure and real-time transaction banking technology for banks, financial institutions, governments and large enterprises, powering a significant share of India's UPI transactions. Mukherjee explained that "We wanted to help banks build and run UPI products, especially smaller and community banks that may not have the scale to digitize on their own. With Mindgate, PayU can move faster, build more products, and deepen its work with banks and NPCI beyond the largest lenders."
PayU serves more than 450,000 merchants across India, ranging from small businesses to large enterprises, with the company seeing the biggest opportunity among small and medium businesses (SMBs) and small and medium enterprises (SMEs), particularly merchants with annual turnover below ₹25 crore. According to Mint reports, Mukherjee stated that "A merchant with turnover below ₹100 crore, or even below ₹10 lakh, may initially use only payment links as its first product. But with automated underwriting and better anomaly monitoring, we can build economically viable solutions for every segment." PayU has little interest in subsidizing growth by spending aggressively to win merchants, with Mukherjee stating the company will not follow strategies of spending heavily to gain market share. As transaction fees come under pressure, payment aggregators are increasingly looking to adjacent revenue streams including settlement tools, subscriptions, point-of-sale devices and rentals, reconciliation, lending, software-as-a-service and foreign exchange for cross-border merchants.
