There is a new credit product in town. UNI Pay 1/3 card allows you to repay the purchase amount in 3 monthly installments at no extra cost. It has been launched in partnership with RBL bank, State Bank of Mauritius and LiquiLoans (P2P-NBFC). For instance, you purchase an item worth Rs 30,000 using this card. You can settle the bill in 3 equal installments of Rs 10,000 over the next 3 months. No extra cost. Nice, isn’t it?
How Is a Uni Pay 1/3 Card Different from a Credit Card?
In a regular credit card, you must pay the full amount by the next due date. In other words, you get the interest-free credit only until the next due date. If you do not pay the bill amount in full, things get very complicated. High credit card interest gets charged from the day of purchase. Essentially, the interest-free credit period is clawed back. Yes, you have the option to convert your purchases into EMIs but those EMIs come with interest burden.
In the UNI 1/3 card, you can split the payment into 3 monthly interest-free installments. Therefore, you get a longer rope. You don’t get a few weeks (as in case of credit card) but a few months to pay for the purchase. Alternatively, if you want a longer repayment tenure, you can go with interest-based EMIs.
How Can You Apply for a Uni Pay 1/3 Card?
Only those between the age of 25 and 60 can apply. You can download the card app from the issuer website and apply for the card.
Once your identity is ascertained through your Aadhaar based verification, your credit profile is fetched from a credit bureau and your application is approved in a few minutes. You get the virtual card instantly. Physical delivery of the card will take some time. The card is powered by Visa. Hence, you can expect almost universal acceptability.
Understanding the Complicated Part
Credit is a good thing per se. The problem comes when you can’t repay what you have borrowed. And this is true for all kinds of credit. Unfair to expect UNI Pay 1/3 card to be any different.
UNI Pay 1/3 card has a concept of carry forward fee, that is based on the customer’s credit profile, can go up to 5.5% per month. That is expensive, even more expensive than a credit card. Of course, interest calculation in a regular credit card works in a convoluted manner. Plus, there are penal charges that add up to the effective cost. The carry forward fee (a disguise for interest charges) is rather simple to understand (or so I think). If you miss a payment, you must pay 5.5% of the unpaid amount. For comparison, credit cards usually charge 3-3.5% per month. The simplicity is one aspect but the cost of missing a payment is super-high in a UNI Pay 1/3 card.
Author’s Disclaimer: There is still not much information on the issuer’s website for me to understand the fine points. As they say, the devil is in the details. I have relied on information available on third-party websites to form an opinion. There might be factual errors in the article.
Should You Go for It?
There is nothing wrong with a UNI Pay 1/3 card. It is good to have flexibility. These days, there are many easy credit options available. There is the credit card, Buy Now Pay Later (BNPL) schemes, instant personal loans and now options such as UNI Pay 1/3 card.
If you are a responsible spender, you can juggle between these options smartly. However, it does not take long to move from the “Responsible” to “Irresponsible” category. There is a very fine line. If you don’t have to make upfront payments for your purchases, you may develop a tendency to overspend. Not sure about you, but it happens with me.
For instance, in case of a credit card, you may keep an eye on the remaining credit limit (available credit limit) to get a sense of your expenses during the month and keep track. Let’s say your credit card limit is Rs 1 lac and after the latest purchase, it is down to Rs 77,000. This means you have spent Rs 23,000 in the current monthly cycle. You can adjust your spending in the remainder of the month accordingly.
However, once you convert these spends to EMIs (no-cost or interest based), it becomes very difficult to keep track. And this is just for the credit card. You also start using BNPL, personal loans or any other credit option like UNI Pay 1/3. Now, unless you are a math wizard, it is not humanly possible to keep track despite your sincerest intentions. Will likely end up overspending. Not all of us go back to Microsoft Excel before making a purchase.
For most fintech companies in India, the end game is lending. The users are just not willing to pay for anything else. Thus, you can expect innovative loan/credit products on a regular basis. And at least some of us will find merit in every such product. Therefore, if the product suits you, use it. You just need to avoid overspending.
Editor’s Note: Slice Pay, a similar product, pays 2% cashback on full payment, whereas Uni Pay pays 1% cashback at the moment. Carry forward fee, credit limits, eligibility and other terms and conditions could also vary.