> ## Content Index > Fetch the complete content index at: https://research.finbox.in/llms.txt > Use this file to discover other available public pages before exploring further. # The Pattern #223: Surprising things that UPI can teach lenders - URL: https://research.finbox.in/newsletter/the-pattern/the-pattern-223-surprising-things-that-upi-can-teach-lenders/ - Published: 2026-10-16T11:32:20.000Z - Updated: 2026-10-16T11:34:37.000Z - Description: The moment is well within reach. - Author: Mayank Jain - Tags: #ThePattern, newsletter, Digital India, UPI, Indian lenders, Credit, Frauds, Amazon Pay, mayank jain Hello everyone, Welcome to the 223rd edition of The Pattern, a weekly newsletter on the latest in finance, technology, and the economy. I can't remember the last time I hesitated before paying someone on UPI. I scan the code, type the PIN, and my mind has already moved on to something else. My guess is it's the same for most of you. We got here in under ten years, which still amazes me a little, and the rest of the world has taken note. The IMF puts UPI at nearly [49% of global real-time payment transaction volumes in 2025](https://www.outlookbusiness.com/news/upi-completes-10-years-clocks-nearly-13000-fold-rise-in-transaction-volume?ref=research.finbox.in). A loan offer inside that same app is a different matter. That's where I stop and think about it a little, and I'm fairly sure most of us do. A [new report from Amazon Pay and Pahlé India Foundation](https://www.aboutamazon.in/news/amazon-pay/how-urban-india-pays-2026-key-findings?ref=research.finbox.in) back that up. Respondents gave payment apps [4.11 out of 5 for security, but when those apps offered credit, the score fell to 3.10](https://www.aboutamazon.in/news/amazon-pay/how-urban-india-pays-2026-key-findings?ref=research.finbox.in). And while [88% of people know digital credit exists, only 31% have used it](https://www.aboutamazon.in/news/amazon-pay/how-urban-india-pays-2026-key-findings?ref=research.finbox.in). That one-point fall is what I want to talk about in this edition. I think it says a lot about where digital lending in India goes next, and about what the whole lending ecosystem can do to close that gap. **The gap is mostly fear, and fear can be fixed** The report surveyed [5,149 consumers and 1,089 merchants across 100 cities](https://www.aboutamazon.in/news/amazon-pay/how-urban-india-pays-2026-key-findings?ref=research.finbox.in), and there’s one number in it I’d want every lender to see. About half the people asked ([51.5%](https://www.aboutamazon.in/news/amazon-pay/how-urban-india-pays-2026-key-findings?ref=research.finbox.in)) said they would borrow through a payment app if fraud protection were guaranteed. Only [16.7%](https://www.aboutamazon.in/news/amazon-pay/how-urban-india-pays-2026-key-findings?ref=research.finbox.in) said they'd avoid it whatever happened. For lenders, I think that's encouraging news. The people on the fence already know what the product is. They want some assurance that it won't go wrong for them, and that's something we can actually work on. This next bit caught me off guard. It's easy to assume that the metros lead India in digital credit. Mumbai, Bengaluru and Delhi would be most people's first guess, and they were certainly mine. The metros have the salaries, the credit cards and the fintech offices, so it feels obvious. The report says otherwise. Tier-2 cities are ahead, with [BNPL use at 60% and credit applications at 41%](https://www.aboutamazon.in/news/amazon-pay/how-urban-india-pays-2026-key-findings?ref=research.finbox.in), and they score [58.64 on the report's Digital Credit Inclusion Index, against 53.10 for Tier-1 cities](https://www.aboutamazon.in/news/amazon-pay/how-urban-india-pays-2026-key-findings?ref=research.finbox.in). Trust seems to be building fastest in places many of us still call the next market, when they are very much the current one. **It isn’t just an India story** Out of curiosity, I wanted to see whether this pattern shows up anywhere else, and Brazil turned out to tell an almost identical story. [Pix is used by 91% of Brazilian adults, and Open Finance has more than 167 million active data-sharing authorisations](https://ezbob.com/open-finance-brazil-transforming-sme-lending-data-access/?ref=research.finbox.in). Even so, a study in Espírito Santo found that [96% of small business owners used Pix, yet only 15% had signed up for open finance](https://ezbob.com/open-finance-brazil-transforming-sme-lending-data-access/?ref=research.finbox.in), and about two-thirds didn't really know what it was. The UK, where open banking began, has [around 15 million users, roughly a quarter of its economically active population](https://ezbob.com/open-finance-brazil-transforming-sme-lending-data-access/?ref=research.finbox.in). I think this tells us something. People getting comfortable with digital payments doesn't mean they'll get comfortable sharing their data or borrowing. That trust has to be built on its own, in every market. **Underwriting is where trust actually starts** People trust a lender who understands them. It sounds obvious, but I think a large part of the market still doesn't feel understood by the credit system as it works today. The report found that informal earners (gig workers, daily-wage workers and others) scored [around 11 points lower than salaried people](https://www.aboutamazon.in/news/amazon-pay/how-urban-india-pays-2026-key-findings?ref=research.finbox.in) on its Digital Credit Inclusion Index. Gig workers were [3.4 times more likely than average to go to a loan app first](https://www.aboutamazon.in/news/amazon-pay/how-urban-india-pays-2026-key-findings?ref=research.finbox.in) when money got tight. So they are out there looking for credit. The trouble is that most traditional scorecards were built around salary slips. Nandan Nilekani recently spoke about exactly this at [SamvAAd 2026](https://news.webindia123.com//news/articles/business/20261015/4511198.html?ref=research.finbox.in). Lending in India has always leaned on assets, he said, and people who don't have any "get access to credit by monetizing the data streams." I agree with him completely. Account Aggregators already handle [around 12 million data pulls a day and reach 20% of adults](https://news.webindia123.com//news/articles/business/20261015/4511198.html?ref=research.finbox.in), and he'd like to see that [above 50% in two to three years](https://news.webindia123.com//news/articles/business/20261015/4511198.html?ref=research.finbox.in), with GST, EPFO, tax and utility data feeding in. If I put myself in a CRO's shoes, the use case is straightforward. If you can see how a delivery partner's income moves through the month, you can give them a loan they'll manage to repay. Get that right a few times and they come back, usually with a friend or two. Brazil is a little ahead of us here. It's putting credit right inside Pix, through [Pix Parcelado for instalments and Pix em Garantia](https://ezbob.com/open-finance-brazil-transforming-sme-lending-data-access/?ref=research.finbox.in), where a business can pledge its future Pix receipts as collateral. It has also rolled out credit portability, which lets a borrower [shift a loan to another lender online in as little as five days](https://ezbob.com/open-finance-brazil-transforming-sme-lending-data-access/?ref=research.finbox.in). If I ran a large incumbent lender, that last one would make me slightly nervous, and I suspect that's partly the point. Borrowers who can leave easily keep you honest. **Sometimes the trustworthy answer is no** Of course, all that access only helps if borrowers come out better off on the other side. Chief Economic Adviser V Anantha Nageswaran [recently said](https://www.aninews.in/news/business/microfinance-sector-must-prioritise-savings-insurance-over-credit-to-avoid-recurring-crises-cea-nageswaran20261009132844/?ref=research.finbox.in) that microfinance should put savings and insurance ahead of credit, and warned bluntly that "there are frequent bouts of over-lending and mis-selling, which should be avoided." If you've lived through an MFI stress cycle, you know how it goes. Lending runs ahead, borrowers end up with three or four loans, and then the whole sector pulls back at once. Digital lending doesn't have to repeat that. The difference will come from using better data to decline wisely, as well as to approve more often. The report found that [77% of people spent at least 50% more than usual during the festive season](https://www.aboutamazon.in/news/amazon-pay/how-urban-india-pays-2026-key-findings?ref=research.finbox.in), and that's exactly when a sensible loan helps and an oversized one drags on well into the new year. **What I'm taking away** When I think back on how UPI became a habit, I can't point to one big moment. It just kept working, payment after payment, until nobody gave it a second thought. I suspect trust in credit will be built in much the same way, gradually and one loan at a time, as more people find that a lender understood how they earn and offered them an amount they could comfortably carry. That's why I'm hopeful. The demand is already there, and it's growing fastest in cities many of us weren't watching. The data rails are being laid too, with Account Aggregators aiming to reach half of India's adults within a few years. Even the warnings, like the CEA's, feel like a sign of a market growing up, because people are now asking whether borrowers end up better off, alongside how many loans went out. India has made one leap like this before with payments, and Brazil suggests the next one is well within reach. Before I sign off, here's a question for you. Ten years from now, do you think people will take a loan as casually as they pay on UPI today? I can see both the upside and the risk in that, and I'd love to know what you think. Just write back, whether it's an answer or any other thoughts you'd like to share. And do pass this on to at least one person you think would enjoy it. Until next week, Mayank *Views are personal and do not reflect those of FinBox or its promoters.* **Reading list** - [RBI raises repo rate to 5.50%, its first hike since February 2023](https://www.angelone.in/news/economy/rbi-increases-repo-rate-to-5-50-first-hike-since-february-2023?ref=research.finbox.in) - [Insurance, not alarm: what the RBI's pre-emptive hike means for growth, markets and credit (Brickwork Ratings)](https://www.brickworkratings.com/Research/Brickwork%5FRatings%5FRBI%5FMPC%5FMeet%5FOutcome%5FOctober%5F2026.pdf?ref=research.finbox.in) - [Small-ticket loans drive India's digital lending boom as digital NBFC books grow 28%](https://www.businesstoday.in/personal-finance/story/small-ticket-loans-drive-indias-digital-lending-boom-average-ticket-size-rises-to-rs18802-says-report-559112-2026-10-01?ref=research.finbox.in) - [UPI MDR charges won't kick in before Diwali as NPCI defers rollout](https://www.outlookbusiness.com/news/upi-mdr-charges-wont-kick-in-before-diwali-npci-defers-rollout?ref=research.finbox.in)