UPI Lite will launch in India to enable small-value transactions in offline mode

The Unified Payments Interface (UPI) is set to launch UPI Lite as an on-device wallet option to help users enable small-value transactions in offline mode. The National Payments Corporation of India (NPCI) has informed member banks about the launch of UPI Lite, which will be the corporation’s answer to mobile wallets, including Paytm and MobiKwik. In January, the Reserve Bank of India (RBI) launched a framework to facilitate low-cost digital payments in offline mode. UPI Lite will be aligned with NPCI’s offer central bank model.

Users of UPI apps will have the option of enabling UPI Lite to make small-value transactions in offline mode, NPCI said in a circular sent to its member banks.

Once activated, users will be able to allocate funds to UPI Lite from their bank account. These funds can be found in a designated account on the device in the general library of the UPI app for users to transact offline.

In the first stage, UPI Lite will process transactions in near-offline mode. This means that it will only debit payments in offline mode and credit the online account. However, NPCI said that next time, UPI Lite will process transactions in a completely offline mode where both debit and credit will be offline.

The upper limit of a UPI Lite payment transaction is set at Rs 200, although the total balance for an on-device wallet can be up to Rs 2,000, NPCI Dr.

Permission to add new funds to the UPI Lite account will only be granted in online mode using Additional Factor Authentication (AFA) or UPI AutoPay.

Like existing mobile wallets with Paytm, the balance available on UPI Lite will carry non-interest. Users do not have to enter UPI PIN to make any transaction through on-device wallet. However, NPCI recommends that users keep an app passcode or device authentication in order to use the UPI app.

NPCI further stated in its notification that a single user can have multiple UPI Lite balances – depending on the number of UPI apps they need to access a specific bank account.

When transacting, UPI Lite Balance will be displayed on the home screen of the UPI app. The UPI app will also use the UPI Lite balance by default for all transactions that cost less than or equal to Rs. 200, transactions without request for peer-to-peer collection, the Payment Body said.

Users will be given the ability to disable UPI Lite services at any time from their UPI app. If the wallet is deactivated, the balance funds will be credited back to the user’s account in real time.

UPI Lite’s transaction details can be found on the UPI App’s Transaction History page. According to NPCI, the available balance will also be displayed on the home screen of the UPI app.

The exact timeline of when we will see UPI Lite functional has not been revealed yet.

“Initially UPI Lite will be launched as a pilot with multiple banks and app providers, and after achieving a reasonable privilege, a full-scale commercial launch will be announced for issuers and app providers with a consent period for on-boarding,” NPCI said in a circular. Off Product Kunal Kalawatia said.

Citing external research, NPCI said that at present 50 per cent of the total UPI transactions are valued at Rs. 200. It suggests that UPI Lite may receive something after it is turned on.

NPCI also aims to reach the billion-a-day payment milestone in the next three to five years. The launch of UPI Lite is expected to play an important role in achieving that goal.

Earlier this month, the RBI launched a ‘123Pay’ UPI service aimed at enabling payments for more than 400 million feature phone users.

According to publicly available details from NPCI, UPI has transacted Rs 4.52 billion worth Rs. 8,26,843 crore in February.

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