Monetary policy review: Soon, pay up to Rs 500 at a go via UPI Lite

To further push the use of UPI-Lite, the Reserve Bank of India has proposed the introduction of offline payments on UPI using Near Field Communication (NFC) technology through UPI-Lite on-device wallet.

This will help in using digital payment in areas with low internet or telecom connectivity and lead to minimal transaction failures. Moreover, the central bank has also proposed to increase the transaction limit from Rs. 200 to Rs. 500 per transaction on UPI Lite with the overall limit retained at Rs. 2,000 per payment instrument. 

NFC is a short-range wireless connectivity technology that allows a phone and payment terminal to communicate with each other. UPI-Lite was launched in September 2022 to reduce transaction failures and optimise processing resources for banks.

RBI said that these limits have been prescribed for small value digital payments in offline mode including for National Common Mobility Card (NCMC) and UPI Lite. “This (NFC) feature will not only enable retail digital payments in situations where internet / telecom connectivity is weak or not available, it will also ensure speed, with minimal transaction declines. Instructions to NPCI (National Payments Council of India) will be issued shortly,” RBI said in a statement on developmental and regulatory policies. 

By removing the need for two-factor authentication for small value transactions, these channels enable faster, reliable, and contactless mode of payments for everyday small value payments, transit payments.

“This (NFC) feature will not only enable retail digital payments in situations where internet / telecom connectivity is weak or not available, it will also ensure speed, with minimal transaction declines. Instructions to NPCI (National Payments Council of India) will be issued shortly,” RBI said in a statement. 

RBI added that these limits were announced for small value digital payments in offline mode including for National Common Mobility Card (NCMC) and UPI Lite.

“Using NFC technology to facilitate offline transactions will undoubtedly boost resolution metrics and improve the customer experience,” said Pranay Jhaveri, managing director -- India and South Asia, Euronet. 

“We welcome RBI’s latest announcements on UPI Lite. They are aligned to make Paytm UPI Lite bigger and better. Paytm UPI Lite has already gained massive popularity with almost 50 million transactions so far with over 9 million users,” said a Paytm Payments Bank spokesperson. 

“The introduction of offline payments through UPI Lite will be our next rocket ship of payments, which will soon make instant transactions possible even in areas with limited or no network coverage,” the spokesperson added.