ULI vs UPI: Understanding the Key Differences in India’s Financial Innovations

UPI and ULI are unique innovations for the financial sector in India. Each of them serves a unique purpose. If we talk about ULI vs UPI, UPI enables instant payments and cashless transactions. Meanwhile, ULI transforms lending by providing borrower information on a unified platform. It helps in making loan approval faster and more efficient. Here is a brief of the difference between UPI and ULI and how they promote financial inclusion.

What is UPI?

UPI also known as Unified Payment Interface is developed by NPCI for facilitating digital transactions across banks, business-to-customer, and peer-to-peer. UPI allows user to transfer money directly from their bank accounts through UPI ID and QR codes without the use of an IFSC code or other bank details. 

Features of UPI

• Instant Payment Transfer: UPI facilitates instant payment that occurs in seconds without the use of bank details.
• Multiple Payment Options: UPI supports multiple payment options including UPI IDs, QR Codes, and bank accounts.
• Available 24/7: Users can transfer money anytime from anywhere with 24/7 service.

What Made UPI So Successful?

• Meets a common need: UPI makes daily transactions instant and simple for both businesses and individuals.
• Strong Support from the Government: The demonetization and digital India campaign from the Government encouraged Indians to use digital payment.
• Popular: As more people and businesses started using UPI, its value increased. It has generated a loop in which more users are joining.

What is ULI?

ULI (Unified Lending Interface) is an online platform that provides consent-based financial and nonfinancial data of borrowers from multiple service providers to lenders. The main aim of ULI is to support the MSMEs. 

This unified interface will reduce paperwork and time spent in the lending process. Currently, ULI is in its testing phase and showing positive results, it will launch soon.

Key Features

• Faster Loan Approval: It will provide borrowers with data on a unified platform and help in quick loan approval by reducing the time of data collection from multiple sources.
• Consent-Based Data: ULI will allow lenders to access the financial and non-financial data of customers including land records, credit scores, etc through a consent-based system.
• Centralized Data Access: This platform will collect the data from multiple sources in a single place.

ULI Vs UPI

Here are the key differences between the UPI and ULI,

UPI Objective 

UPI’s main objective is to facilitate transactions between bank accounts through a UPI ID. It is a suitable and convenient option for cashless transactions that individuals and businesses can use.

ULI Objective

The main objective of ULI is to speed up the loan approval process by providing easy data access to lenders through APIs.

UPI Use Case

UPI is popular among individuals, merchants, and businesses for instant payments. Individuals use it as a payment solution for everyday expenses while businesses use it for B2C and B2B transactions. Its convenience and instant payment make it a preferred digital payment solution among millions of users.

ULI Use Case

ULI will be used during the loan approval process. For example, if someone applies for a loan, ULI will help in the borrower document verification process and speed up the loan approval as compared to traditional ones.

The ULI will help lenders gather borrowers’ information on a single platform and speed up the loan approval process as compared to the traditional one.

UPI Users

UPI is used by individuals, merchants, and businesses as a convenient and efficient solution for daily transactions.

ULI Users

It will be helpful for borrowers seeking quick loan approvals and Lenders who need financial and non-financial data of borrowers for quick verification.

In simple words, UPI promotes instant transactions and ULI will streamline the borrower data collection for verification and loan approval process. UPI is simple whereas ULI has some complexity due to the involvement of multiple parties. 

Conclusion

ULI vs UPI is incomparable as both of them are different and positively contribute to financial services. UPI simplifies digital payment and makes transactions fast and convenient. ULI is related to lending, it is a platform that will help lenders in the data collection of borrowers and make the loan approval process faster. It focuses on supporting underserved segments and MSMEs. It will reduce the use of paperwork in the lending process. Both UPI and ULI will drive more financial inclusion. They will help in building the digital financial ecosystem in India.

FAQs

What is ULI in lending?

ULI is a platform that provides financial and non-financial data of borrowers from multiple sources and eliminates the need of manual data collection.

How is UPI Different from ULI?

UPI is related to instant payments and ULI is related to lending.

What type of data does ULI provide for loan approvals?

It provides financial and non-financial data of borrowers along with land records.

What are JAM, UPI, and ULI?

The JAM, UPI, and ULI are the three initiatives that will redefine financial inclusion in India. Where JAM refers to Jan Dhan, Aadhaar, and Mobile, UPI is a unified payments interface and ULI is a Unified lending interface.