NPCI Set To Launch UPI Lite In Offline Mode; Small Value Transactions To Enable Soon

Users of the Unified Payments Interface (UPI) will be able to use UPI Lite as an on-device wallet option to facilitate small-value transactions in offline mode. The National Payments Corporation of India (NPCI) has notified member banks of the introduction of UPI Lite, which would effectively be the NPCI's response to mobile wallets such as Paytm and MobiKwik.

Replenishment Of Funds

The Reserve Bank of India (RBI) introduced a framework in January to make small-value digital payments easier to make offline. The NPCI's product will be UPI Lite, which will follow the central bank's approach.

In a circular sent to its member banks, NPCI announced that users of UPI apps will enable UPI Lite for making small-value transactions in offline mode. Users will be able to transfer money from their bank account to UPI Lite after the feature has been enabled. These monies will be available for offline transactions in a designated account on-device in the users' UPI app's shared library.

UPI Transactions Mode

UPI Lite will process transactions in a near-offline way in the initial phase. This implies it will only debit payments when you're offline and credit your account when you're online. However, NPCI stated that at a later point, UPI Lite will conduct transactions in complete offline mode, which will include both debit and credit payments.

According to NPCI, the highest limit of a UPI Lite payment transaction is Rs. 200; however, the overall balance limit for the on-device wallet can be up to Rs. 2,000. The online method with additional factor authentication (AFA) or utilizing UPI AutoPay will be the only way to add new funds to the UPI Lite account.

The sum available in UPI Lite will be non-interest bearing, similar to the balance available in existing mobile wallets such as Paytm. Users will not be prompted to enter their UPI PIN while using the on-device wallet. However, NPCI advises users to utilize the UPI app with an app passcode or device authentication.

In its circular, the NPCI also stated that a single user can have numerous UPI Lite balances, depending on how many UPI apps they have to access one bank account.

The UPI Lite balance will be displayed on the UPI app's home screen while conducting transactions. The UPI app will also use UPI Lite balance by default for all transactions worth less than or equal to Rs. 200, except peer-to-peer collect request transactions, according to the payments body.

Disabling UPI Lite Services

Users will be able to disable UPI Lite services from their UPI apps at any time. The balanced fund will be credited back to the user profile in real-time when the wallet is disabled. UPI Lite transaction data will be visible on the UPI app's transaction history page. According to NPCI, the user's account balance would also be visible on the UPI app's home screen.

According to NPCI, 50 percent of total UPI transactions have a transaction value of up to Rs. 200 at the moment, citing external research. This indicates that UPI Lite may acquire traction after its introduction. However, the exact day on which we might see UPI Lite in effect has yet to be revealed.

Within the next three to five years, NPCI hopes to attain the billion-a-day payment milestone. The launch of UPI Lite is expected to be critical in attaining that goal. The RBI launched the '123Pay' UPI service earlier this month, to enable payments for over 40 million feature phone users. In February, UPI processed 4.52 billion transactions worth Rs. 8,26,843 crore, according to NPCI's published data.