NPCI Set to Launch UPI Lite to Enable Small-Value Transactions Offline

UPI Lite is set to debut as an on-device wallet option for users on the Unified Payments Interface (UPI), to help enable small-value transactions in offline mode. The National Payments Corporation of India (NPCI) informed member banks about the launch of UPI Lite that will essentially be the corporation's answer to mobile wallets including Paytm and MobiKwik. In January, the Reserve Bank of India (RBI) introduced a framework for facilitating small-value digital payments in offline mode. UPI Lite will be NPCI's offering aligning with the central bank's model.

Users on UPI apps will have the option to enable UPI Lite for making small-value transactions in offline mode, NPCI said in a circular sent to its member banks.

Once enabled, users will be able to allocate funds from their bank account to UPI Lite. These funds will be available in a designated account on-device on the common library of the users' UPI app for making transactions offline.

In the first phase, UPI Lite will process transactions in near offline mode. This means that it will only debit payments in offline mode and credit the account when online. However, NPCI said that at a later point, UPI Lite would process transactions in complete offline mode where debit and credit both will be in offline.

The upper limit of an UPI Lite payment transaction is set at Rs. 200, though the total limit of balance for the on-device wallet can be of up to Rs. 2,000, NPCI said.

Adding new funds to the UPI Lite account will only be allowed in online mode with additional factor authentication (AFA) or using UPI AutoPay.

Similar to the existing mobile wallets including Paytm, the balance available in UPI Lite will be non-interest bearing. Users will also not be required to enter the UPI PIN for making any transactions through the on-device wallet. However, NPCI does recommend users to have an app passcode or device authentication in place for using the UPI app.

NPCI also noted in its circular that a single user can have multiple UPI Lite balances — depending on the number of UPI apps they have to access one designated bank account.

While making transactions, the UPI Lite balance will be displayed on the home screen of the UPI app. The UPI app will also by default use UPI Lite balance for all transactions that are value of less than or equal to Rs. 200, excluding peer-to-peer collect request transactions, the payments body said.

Users will be given the ability to disable UPI Lite services at any point of time from their UPI apps. On disabling the wallet, the balance fund will be credited back to the user account in real time.

Transaction details of UPI Lite will be available on the transaction history page of the UPI app. The available balance will also be displayed to the user on the UPI app's home screen, according to NPCI.

Exact timeline on when we could see UPI Lite in action has not yet been revealed.

“Initially UPI Lite shall be launched as a pilot with multiple banks and app providers, and after a due comfort is achieved, the full-scale commercial launch with compliance timelines for on-boarding for the issuers and app providers shall be declared,” NPCI Chief of Product Kunal Kalawatia said in the circular.

Citing external research, NPCI said that 50 percent of total UPI transactions at present carries a transaction value of up to Rs. 200. This suggests that UPI Lite could gain some adoption following its launch.

NPCI is also aiming to reach the billion-a-day payments milestone within the next three to five years. The launch of UPI Lite is likely to play an important role in achieving that goal.

Earlier this month, RBI introduced a ‘123Pay' UPI service that is aimed to enable payments for over 40 crore feature phone users.

According to the details available publicly by NPCI, UPI logged 4.52 billion transactions worth Rs. 8,26,843 crore in February.