As UPI payments become a part and parcel of digital payments in India lately, the next key thing that is geared to strengthen the digital payments ecosystem is UPI Lite.
National Payment Corporation of India (NPCI) intends to shift small value transactions from online to offline. This will be known as ‘UPI- lite - on device wallet'. It is vital to mention here that the total value of digital transactions in India has grown sharply from ₹100 crore in 2016 to a whopping ₹7 lakh crore in Oct 2021.
As of now, there is no specific date for the launch of UPI Lite. NPCI said, in a statement, that a pilot will be launched with multiple banks and app providers. Once a due comfort is attained, the full-fledged commercial launch will follow.
With QR Code too
Unlike UPI 123Pay, UPI Lite will enable QR code based payments too offline. In fact, UPI 123Pay is essentially an interactive voice response or IVR based technology, with app based functionality as well.
With UPI Lite, customers will have the option to scan any QR code and make the payment without internet access. This, in fact, makes sense because 75 percent of the total volume of retail transactions in India are below ₹100 transaction value.
Also, nearly half of the total UPI transactions have a transaction value of up to ₹200. No wonder then the offline transactions on UPI Lite will be allowed for up to ₹200.
In two phases
This will be introduced in two phases. In the first phase, UPI lite will process transactions in offline mode (debit offline and credit online). Later, UPI lite will allow transactions in completely offline mode which means both debit and credit offline.
To be able to use it, user can download any UPI app. Following this, user can activate UPI lite called 'On Device Wallet'. Once enabled, users can straightaway transfer funds from their bank account to UPI Lite.
It is noteworthy that although payments are possible in an offline mode, you would need internet connectivity to replenish funds using an additional factor authentication (AFA) or through UPI AutoPay, which needs to be registered online using an AFA.
Once UPI Lite becomes operational, there will likely be a reduced traffic on the payments’ platform. This means an increased availability of core banking system for big ticket payments through NEFT and RTGS.