RBI POLICY UPDATE REGARDING UPI PAYMENT

Reserve Bank on Thursday proposed to increase the per transaction payment limit to Rs 500 for UPI Lite in offline mode and announced other measures to further deepen the reach and use of digital payments in the country.

Transaction Limit For UPI Lite

Presently, a limit of Rs 200 per transaction and an overall limit of Rs 2,000 per payment instrument has been prescribed by the Reserve Bank for small-value digital payments in offline mode, including for National Common Mobility Card (NCMC) and UPI Lite. By removing the need for two-factor authentication for small-value transactions, these channels enable faster, more reliable, and contactless modes of payments for everyday small-value payments, transit payments, etc. “Since then, there have been demands for enhancing these limits. To encourage wider adoption of this mode of payments and bringing in more use cases into this mode, it is now proposed to increase the per transaction limit to Rs 500,” RBI Governor Shaktikanta Das said. The overall limit is, however, retained at Rs 2,000 to contain the risks associated with the relaxation of two-factor authentication and instructions in this regard will be issued shortly, he added. Intending to harness new technologies for enhancing the digital payment experience for users, Das said, it is proposed to enable ‘Conversational Payments‘ on UPI, which will enable users to engage in conversation with AI-powered systems to make payments and introduce offline payments on UPI using Near Field Communication (NFC) technology through ‘UPI-Lite‘ on-device wallet.

UPI, with its ease of usage, safety, security, and real-time features, has transformed the digital payment ecosystem in India. The addition of many new features over time has enabled UPI to facilitate the diverse payment needs of the economy. As Artificial Intelligence (AI) is becoming increasingly integrated into the digital economy, conversational instructions hold immense potential in enhancing ease of use, and consequently reach, of the UPI system, he said. It is, therefore, proposed to launch an innovative payment mode viz., ‘Conversational Payments’ on UPI, that will enable users to engage in a conversation with an AI-powered system to initiate and complete transactions in a safe and secure environment, he said.

This channel will be made available in both smartphones and feature phones-based UPI channels, thereby helping in the deepening of digital penetration in the country, he said. The facility will, initially, be available in Hindi and English and will subsequently be made available in more Indian languages and instructions to NPCI will be issued shortly, he added. To increase the speed of small-value transactions on UPI, an on-device wallet called ‘UPI-Lite‘ was launched in September 2022 to optimize processing resources for banks, thereby reducing transaction failures.

The product has gained traction and currently processes more than ten million transactions a month. “To promote the use of UPI-Lite, it is proposed to facilitate offline transactions using Near Field Communication (NFC) technology. This feature will not only enable retail digital payments in situations where internet/telecom connectivity is weak or not available, but it will also ensure speed, with minimal
transaction declines. Instructions to NPCI will be issued shortly,” he said.