In an effort to promote the utilization of UPI-Lite wallets in areas with limited or no internet access, the Reserve Bank of India (RBI) has raised the maximum threshold for offline payment transactions from Rs 200 to Rs 500. Nevertheless, the general cap for offline transactions using a payment instrument remains fixed at Rs 2,000 at all times.
As indicated in an RBI circular dated August 24, 2023, "As per the announcement made in the Statement on Development and Regulatory Policies dated August 10, 2023, the upper limit for offline payment transactions has been increased to Rs 500. The other guidelines outlined in the framework will remain applicable without any changes."
On August 10, 2023, the Reserve Bank of India (RBI) enhanced the transaction ceiling from Rs 200 to Rs 500 in a bid to foster widespread acceptance of UPI Lite online. This initiative aims to facilitate swifter, more dependable, and contactless payments for routine, low-value purchases, transit payments, and similar transactions by eliminating the need for two-factor authentication for minor transactions.
Experts shared their insights following the RBI MPC's announcement to expand the transaction boundaries for small-value digital payments:
Dr. Soumya Kanti Ghosh, Group Chief Economic Adviser, State Bank of India, commented: In order to enhance the customer experience in the payment system, particularly in UPI, the RBI has unveiled Conversational Payments on UPI. This feature will enable users to interact with an AI-driven system to conduct transactions and has also allowed offline payments on UPI through NFC technology. Additionally, the transaction limits for small-value digital payments in offline mode have been increased to Rs 500. Both UPI Lite and NCMC card function as wallets, permitting the expenditure of pre-loaded funds in the app/card without an internet connection for debits, while credits are processed online. Given that the NCMC card can be employed at ATMs and for online payments, the raised transaction limit to Rs 500 will amplify the use of cashless transactions through UPI Lite and NCMC card.
Adelia Castelino, Co-Founder and Managing Director of In-Solutions Global, shared her perspective: The decision to elevate the transaction cap for small-value payments in offline mode from Rs 200 to Rs 500 is a positive step. This increased limit will encompass a broader array of daily transactions, rendering UPI Lite a feasible choice for various everyday expenses. Moreover, it will stimulate more users to adopt digital payment methods for their convenience.
What is UPI Lite? UPI Lite is an "on-device wallet" feature that empowers users to perform real-time small-value payments without the necessity of a UPI PIN.
How to Utilize UPI Lite: Funds must first be loaded into the wallet on the app from the user's bank account. Subsequently, these pre-loaded funds can be employed to make payments via UPI Lite from the wallet.
Transaction Limit for UPI Lite: The transaction limit has been raised to Rs 500 from Rs 200.
Other Announcements during RBI MPC on August 10, 2023: The RBI Governor proposed the introduction of Near Field Communication (NFC) technology to facilitate offline payments. The RBI MPC statement stated, "To bolster the adoption of UPI Lite, it is proposed to facilitate offline transactions through Near Field Communication (NFC) technology. This feature not only enables retail digital payments in scenarios where internet or telecom connectivity is weak or unavailable, but also ensures swiftness and minimal transaction rejections. Instructions to NPCI will be issued in the near future."
Key FAQs as per the NPCI website: How can a customer deactivate a UPI Lite account? Customers can choose to deactivate a specific UPI Lite (On-Device wallet). Upon clicking the deactivate button, the remaining funds available in the bank's LITE account will be credited to the customer's account.
Is real-time top-up possible in UPI Lite? Yes, top-up transactions in UPI LITE are processed in real-time.
What if a customer wishes to add another UPI Lite (On-Device wallet) account to an app that already has an active UPI Lite (On-Device wallet)? Customers will need to first deactivate the existing LITE account to initiate a refund for the UPI LITE (On-Device wallet) balance (stored in the CL) that is active on the given app. Subsequently, they can activate a UPI LITE account using the bank account of their choice.