UPI Lite: Increased Transaction Limit and Offline NFC Payments

The Reserve Bank of India (RBI) has announced significant changes to the Unified Payments Interface (UPI), indicating a potential transformation in the digital payments landscape. The updates were revealed by Shri Shaktikanta Das, Governor of the Reserve Bank of India, during the RBI’s bi-monthly policy review. While the key repo rate was maintained at 6.5 percent by the Monetary Policy Committee (MPC), the following changes were announced:

Conversational Payments with AI:

• The National Payments Corporation of India (NPCI) is set to introduce ‘Conversational Payments’ on UPI, leveraging advanced technology to enhance digital payments. This feature enables users to securely conduct payment transactions through interactions with AI-powered systems.
• Available on both smartphones and feature phones, this innovation is expected to boost digital adoption throughout the country.
• Initially, the feature will be available in Hindi and English, with plans to add other Indian languages in the future.
• Detailed guidelines for this feature will be provided by the RBI.

Higher UPI Transaction Limit:

• The RBI has proposed an increase in the UPI Lite transaction limit for offline usage, from Rs 200 to Rs 500. UPI Lite is designed for quick, reliable, and contactless payments, especially for small transactions and transit payments.
• Despite the proposed increase in the offline transaction limit, the overall limit for UPI Lite transactions will remain at Rs 2,000. This decision is intended to balance the benefits of higher transaction limits with security concerns related to relaxing two-factor authentication.
• The objective is to encourage greater adoption of UPI Lite as a payment method.

Offline UPI Payments with NFC:

• The RBI is contemplating the implementation of offline payments using Near Field Communication (NFC) technology for UPI Lite.
• This feature enables digital retail payments even in regions with limited or no internet or telecom connectivity.
• Users can make payments by tapping their smartphones on point-of-sale (PoS) machines, simplifying the payment process.
• The NPCI, responsible for overseeing UPI and UPI Lite, will receive guidelines for this offline payment feature.