UPI lite announced for offline transactions

The National Payment Corporation of India’s (NPCI) Unified Payment Interface (UPI) has become one of the most widely accepted digital payment mode because of its ease and convenience. UPI Lite apps such as GooglePay, Phonepe, Paytm, are now ruling the online payment industry. However, NPCI now wants to make small value transactions through UPI offline. This is called ‘UPI lite – On-Device wallet’.

It should be noted that NPCI has not revealed any specific date for the launch of UPI Lite. “UPI Lite will be initially 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 will be declared,” NPCI added.

So what exactly does UPI Lite try to solve for?

According to NPCI, India processes one billion UPI transaction everyday, and to facilitate these growing transactions, banks have to upgrade their infrastructure and this requires better technical grip and huge investments. The NPCI took charge of this problem and has designed the ‘UPI lite functionality for UPI users. This means you can now send payments exactly how you used to do but the only difference payments under this will work offline.

Imagine a situation, where you don’t have access to internet, you might think that you could use 123Pay or USSD-based UPI service to make a transaction offline. But what’s left out here is that you can’t scan any QR code like you could with internet enabled UPI apps: Paytm, GooglePay, etc.

With UPI lite, you will have the option to scan any QR code and make the payment without any internet. According to NPCI, at least 75 per cent of the total volume of retail transactions (including cash) in India are below Rs 100 transaction value. Further, 50 per cent of the total UPI transactions are having a transaction value of up to Rs 200. This is why NPCI will only allow offline transactions upto Rs 200.

In phase 1, UPI lite will process transactions in offline mode(debit offline and credit online). At a later point, UPI Lite will process transactions in complete offline mode i e debit and credit both offline.

Transferring funds from UPI apps to UPI lite

The perquisite to use UPI lite is any UPI app. NPCI notes that any user of UPI app will have the option to enable UPI Lite called “On-Device wallet” on their UPI app itself. Once enabled, users can allocate funds from their bank account to UPI lite.

At present, only debit from UPI lite balance shall be permitted and all credits to UPI lite (including refunds, etc.) will be processed online in the user’s bank account.