The potential of credit transactions on Unified Payments Interface, or UPI, is currently a hot topic in fintech. But it’s a challenging terrain: in July, some apps hit regulatory bumps and were forced to halt their credit drive.

BharatPe, in contrast, has navigated deftly. The Delhi-based startup has innovated on UPI rails to launch Postpe in the buzzy buy now, pay later (BNPL) segment. 

Postpe lets consumers make payments through QR codes or card terminals and send money to others using the credit limit available on the app. This has led the industry to believe that BharatPe has cracked how to offer credit on UPI. In reality, its model rests on a large network of affiliated merchants.

This is not the first time BharatPe co-founder Ashneer Grover has used tech innovations to open lending taps. In 2019, the company used the peer-to-peer channel to provide credit and investment options to its merchant base. 

The company is currently scaling up its business even as other fintechs, such as Bullet, Freo and LazyPay, wait for regulatory clarity on QR code-based credit transactions on UPI, which is managed by the National Payments Corporation of India (NPCI). 

The CapTable spoke to legal experts and studied Postpe’s disclaimers to decode its model.