Bharat Global Time News Desk
Date: July 15, 2025
Move over, debit cards — Gen Z is rewriting India’s financial future with UPI, Buy Now Pay Later (BNPL), and app-based instant credit. What started as convenience is now turning into a full-blown economic shift, as millions of young Indians embrace digital credit like never before.
UPI: The Gateway Drug to Digital Spending
Unified Payments Interface (UPI) was meant to simplify peer-to-peer payments — but for Gen Z, it’s become much more:
- Seamless shopping via QR codes, apps, and voice commands
- Zero transaction cost fuels impulse buying
- Micro-merchants to luxury brands now accept UPI
- Gen Z sees UPI as faster and cooler than cards or cash
In fact, as of mid-2025, over 80% of all daily digital transactions by users aged 18–26 are happening through UPI.
BNPL: Buy Now, Worry Later?
The rise of Buy Now Pay Later (BNPL) apps like Simpl, ZestMoney, LazyPay, and Amazon Pay Later has added a whole new layer of spending behavior.
Why Gen Z loves it:
- No upfront payment
- No credit card needed
- Instant approval in under 60 seconds
- Repay in 15–45 days, often interest-free
But economists are warning:
“BNPL is not free money. It’s delayed debt,” says a Reserve Bank of India official.
With no credit card limits, Gen Z users are often unaware of how much credit they’ve stacked up, leading to missed payments and mounting penalties.
Instant Loans: From Pizza to Phone EMIs in Minutes
Apps like KreditBee, CASHe, Fibe, Slice, and even WhatsApp loan offers now allow Gen Z to take loans as small as ₹500 for:
- A weekend trip
- A party dress
- A gadget upgrade
- Even food delivery
These micro-loans are processed with:
- Minimal KYC
- No human interaction
- Same-day disbursal
But default rates are rising, prompting RBI to tighten digital lending norms.
India’s Gen Z Debt Profile (2025 Snapshot)
- Average age of first loan: 21
- BNPL active users: 11 crore
- UPI users aged 18–26: 19 crore
- Monthly credit exposure: ₹2,000 to ₹22,000 per user
- Top spending categories: Fashion, gadgets, food, fuel, OTT subscriptions
What’s Driving the Boom?
- No stigma around debt — Gen Z sees it as a financial tool, not a trap
- Social media pressure to look good, travel, and “live your best life”
- Finfluencers promoting ‘smart borrowing’
- Lack of formal financial education in schools and colleges
As a 22-year-old Delhi college student puts it:
“If I can get an iPhone on EMI without a credit card, why not? My Insta content pays for it anyway.”
Red Flags: Are We Heading for a Mini Credit Crisis?
The RBI and economists have expressed concern over:
- Rising NPAs (non-performing assets) in small ticket loans
- Shadow lending via unregistered loan apps
- High interest after grace periods (up to 42% p.a. in some apps)
- Mental health impact of debt anxiety among young borrowers
India’s financial watchdogs are now pushing for:
- Better loan transparency
- Stricter KYC norms
- Credit limit capping for first-time borrowers
Schools May Soon Teach Credit Literacy
In a first, the NCERT is planning to introduce “Financial Life Skills” from Class 9 onwards, including:
- How credit works
- What is a CIBIL score
- The dangers of predatory lending
The Road Ahead: Opportunity or Overload?
Gen Z is not afraid of credit — they’re using it to build lifestyle, not just survive. But the thin line between smart spending and financial collapse is already visible.
If this trend is managed with education, regulation, and responsible innovation, India may be witnessing the birth of a confident, credit-savvy middle class.
If not, India’s young economy might enter a debt spiral.
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