ICICI Bank PayLater Account: Combine UPI and Credit

icici bankUPI transactions have boomed over the last couple of years and are giving serious competition to credit/debit cards and net banking in online transactions. The only problem is that you cannot make UPI payments on credit. i.e., the money gets debited from your savings bank account. You must have the money in our bank account to use UPI for payment.

ICICI Bank PayLater account combines the convenience of UPI and flexibility of a credit card. You get an interest free credit facility of up to 45 days and the interesting part is that the facility is UPI based. Your outstanding balance in the PayLater account is auto debited from your savings bank account on 15th of each month.

In this post, let us find out more about the PayLater facility.

How Does PayLater Facility Work?

With PayLater, you can get a credit limit between Rs 5,000 and Rs 20,000. PayLater facility is UPI based. i.e., on approval of your application, you will get a UPI id (PL.xxxxx@icici). While making payments on any merchant website, you can select UPI as a payment option and enter the UPI id. Remember this UPI id will be different from the other UPI id that you may have created for your savings account.

What Can You Use ICICI Bank PayLater Facility For?

You can use this facility to shop online, pay bills and pay to merchant UPI id. PayLater account cannot be used for making credit card payments. You can NOT use the facility to transfer funds to other bank accounts or do any person-to-person transfer. As I understand, you can use the PayLater facility only with registered merchants. You can expect most shopping websites and payment gateways to be registered with ICICI Bank for PayLater facility. In other words, the bank will reject any collect (payment) request from (to) from any non-merchant UPI id. You can NOT use PayLater account for purchasing gold or making investments or insurance payments.

How to Apply for ICICI Bank PayLater Facility?

If you are an ICICI Bank Account holder, you can apply for the facility using net banking or iMobile (ICICI Bank’s mobile banking app).  Go through this video to understand the steps. 

Note that this facility is available for only select users of ICICI Bank. You will find that out when you login into iMobile or net banking website. Your PayLater credit limit is also automatically decided by the bank. You can have just one PayLater account with ICICI Bank.

How Do You Make the Payment?

The account statement for the transactions during the previous month will be generated on 1st of each month and the dues will be auto debited from your bank account on 15th. If your account does not have sufficient balance on the 15th, you will be charged interest at the rate of 3% p.a. along with late payment charges. Hence, the cost of non-timely payment of dues is in line with a credit card. In addition, the bank will likely charge you penalty for ECS/NACH return.

How Is ICICI PayLater Different from a Credit Card?

  • ICICI PayLater facility offers you credit limit only up to Rs 20,000. The credit limit with a credit card can be much higher.
  • ICICI PayLater is more restrictive. You can make only UPI based payments using ICICI PayLater. Therefore, if the merchant does not accept UPI payments or is not registered with ICICI Bank, you cannot use PayLater facility. A credit card is much more widely acceptable.
  • UPI payments are much safer compared to credit card payments. While making payment through a credit card, you must enter credit card details, expiry date, CVV and OTP (only for domestic transactions). You may not be comfortable with entering such details on all websites and apps or from all your devices. The same applies to net banking payments. However, in case of UPI, you just need to enter a text string (xxxxxx@icici). You will get an approval request on your mobile app and you approve it after entering a mobile PIN. You can use different UPI ids for the same bank account. I will be more comfortable using UPI for payment on lesser known apps or websites (though payment gateways eliminate such concerns at least for websites).
  • ICICI PayLater is a UPI based system and UPI works only in India. You cannot make payments on international websites using UPI. Credit cards have much wider acceptability.

Is ICICI Bank PayLater Facility Any Good?

I do not see much merit in the ICICI PayLater facility except for the following:

  1. At present, you cannot link UPI address to a credit card account. You can link a UPI id only with a bank account. If you prefer to buy on credit, you will have to type in your credit card details. You may not want to do that because it is cumbersome, and you may be concerned about data security. UPI is much simpler and safer for online payments. You do not have to enter bank account details and hence you do not need to worry about data safety. ICICI PayLater combines interest-free credit and the comfort and safety of UPI.
  2. You may prefer UPI for payment. However, in case of UPI, your savings bank account gets debited immediately. At the end of the month, if you want to review your expenses, you will have to segregate expenses from the bank account statement. With PayLater facility, you can pay from your PayLater UPI id and review the PayLater account statement at the end of the month, just like you can do with your credit card statement.

To be honest, the above two reasons are good enough.

Disclosure: I do not use the ICICI PayLater facility. Hence, my knowledge about acceptability of PayLater facility is limited.

Further Reading: ICICI Bank PayLater Page on ICICI Bank website


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