RBI policy: What is UPI Lite that enables PIN-less offline digital payments? | Mint

Unified Payments Interface, or UPI, undoubtedly, has lately become ubiquitous. It has emerged as one of the world’s most popular alternative payments method, processing transactions to the tune of ₹80.8 lakh crore ($964 billion) in April-July 2024, a sharp 37 per cent year-on-year (y-o-y) surge in comparison to previous year. To give an impetus to UPI, NPCI rolled out UPI Lite recently to allow small value digital transactions in the offline mode.

On Wednesday, RBI Governor announced to raise the transaction limit of UPI Lite from ₹500 to ₹1,000 and wallet limit from ₹2,000 to ₹5,000.

“UPI has transformed India’s financial landscape by making digital payments accessible and inclusive through continuous innovation and adaptation. To further encourage wider adoption of UPI and make it more inclusive, it has been decided to increase the UPI Lite wallet limit from ₹2,000 to ₹5,000 and per-transaction limit from ₹500 to ₹1,000,” said RBI Governor Shaktikanta Das, while announcing the monetary policy committee (MPC) report after the three-day MPC meet that culminated on Oct 9.

What is UPI Lite?

UPI Lite allows users to carry out PIN-less transactions under ₹500 and balance limit of ₹2,000 at any point of time. UPI Lite was introduced as part of the framework issued by RBI for facilitating small value digital payments in offline mode on January 3, 2022 (updated on Aug 24, 2023).

Meanwhile, it is noteworthy to mention that the NPCI, on Aug 27, introduced auto top-up on UPI Lite. 

The auto top-up allows balance to be reloaded by any amount chosen by the user, not exceeding UPI Lite balance limit, which was ₹2,000 now but now been raised to ₹5,000.

How is it used?

Sending money via UPI Lite is quite convenient and straight forward. One can simply open the UPI Lite app, and opt to pay. Then, you need to enter the amount that can be sent successfully without having to enter the UPI PIN.

What are the advantages of UPI Lite?

1. One single factor authentication for UPI transactions of small value i.e., below ₹1,000.

2. Higher success rate for UPI transactions since they are in offline mode.

3. Since transactions are offline, they are not recorded in the bank passbook, leaving them uncluttered.

4. In the long run, they are considered beneficial with less infrastructure load imposed on the remitter bank.