RBI POLICY UPDATE REGARDING UPI PAYMENT

Reserve Bank on
Thursday proposed to increase the per transaction payment limit to Rs 500 for
UPI Lite in offline mode and announced other measures to further deepen the
reach and use of digital payments in the country.

Transaction Limit For UPI
Lite

Presently,
a limit of Rs 200 per transaction and an overall limit of Rs 2,000 per payment
instrument has been prescribed by the Reserve Bank for small value digital
payments in offline mode, including for National Common Mobility Card (NCMC)
and UPI Lite.

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 etc.

“Since
then, there have been demands for enhancing these limits. To encourage wider
adoption of this mode of payments and bring in more use cases into this mode,
it is now proposed to increase the per transaction limit to Rs 500,” RBI
Governor Shaktikanta Das said.

The
overall limit is, however, retained at Rs 2,000 to contain the risks associated
with relaxation of two-factor authentication and instructions in this regard
will be issued shortly, he added.

With the
objective of harnessing new technologies for enhancing the digital payments
experience for users, Das said, it is proposed to enable ‘Conversational
Payments’ on UPI, which will enable users to engage in conversation with
AI-powered systems to make payments and introduce offline payments on UPI using
Near Field Communication (NFC) technology through ‘UPI-Lite’ on-device wallet.

UPI,
with its ease of usage, safety and security, and real-time feature, has
transformed the digital payment ecosystem in India. Addition of many new
features over time have enabled UPI to facilitate diverse payment needs of the
economy.

As Artificial
Intelligence (AI) is becoming increasingly integrated into the digital economy,
conversational instructions hold immense potential in enhancing ease of use,
and consequently reach, of the UPI system, he said.

It
is, therefore, proposed to launch an innovative payment mode viz.,
‘Conversational Payments’ on UPI, that will enable users to engage in a
conversation with an AI-powered system to initiate and complete transactions in
a safe and secure environment, he said.

This
channel will be made available in both smartphones and feature phones-based UPI
channels, thereby helping in the deepening of digital penetration in the
country, he said.

The facility
will, initially, be available in Hindi and English and will subsequently be
made available in more Indian languages and instructions to NPCI will be issued
shortly, he added.

To
increase the speed of small value transactions on UPI, an on-device wallet
called ‘UPI-Lite’ was launched in September 2022 to optimise processing resources
for banks, thereby reducing transaction failures.

The
product has gained traction and currently processes more than ten million
transactions a month.

“To
promote the use of UPI-Lite, it is proposed to facilitate offline transaction
using Near Field Communication (NFC) technology. This 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 will be issued shortly,” he
said.