The Definitive guide to UPI Lite
UPI Lite is a digital wallet like feature on top of UPI, which allows users to make frictionless transactions of up to Rs 200. This simplified version of UPI was developed by the National Payments Corporation of India (NPCI) and introduced by the Reserve Bank of India in September 2022. It acts as an offline UPI, allowing for quicker transactions in places with limited internet access.
What is UPI Lite?
UPI Lite, introduced by the National Payments Corporation of India (NPCI) in September 2022, is a simplified variation of the Unified Payments Interface (UPI) payment system. Its purpose is to streamline and expedite small-value transactions, such as payments for groceries or low-cost individual items. UPI Lite aims to provide users with a convenient and efficient solution for making quick and hassle-free payments.
UPI Lite operates by creating an on-device wallet that has the capacity to store up to Rs. 2,000. This feature is available on various popular payment applications, including Paytm and PhonePe.
Once UPI Lite is set up, users can effortlessly conduct instant and secure transactions of up to Rs. 200. The UPI Lite wallet allows users to add funds twice a day, with a maximum limit of Rs. 2,000 per day. Consequently, the total daily usage of UPI Lite can reach up to Rs. 4,000. This provides users with a convenient and flexible option for making hassle-free transactions within the specified limits.
When using UPI Lite, it is essential to be aware of the following guidelines:
- The maximum limit for adding funds to your UPI Lite wallet is Rs. 2,000
- The maximum transaction amount allowed through UPI Lite is Rs. 200 per transaction
- UPI Lite is exclusively accessible for bank accounts that support this particular feature
By keeping these considerations in mind, users can effectively manage their transactions and ensure a seamless experience while using UPI Lite.
Why UPI Lite?
Capitalising on the momentum generated by the demonetisation movement, UPI played a pivotal role in driving the adoption of a cashless economy in India. Since its launch in 2016, UPI has emerged as one of the most popular payment methods for both online and offline transactions.
Let’s delve into some noteworthy statistics related to UPI:
- In the fiscal year 2021-2022, UPI witnessed transaction volumes totalling a staggering 74 billion
- UPI processes millions of transactions each day, reflecting its widespread usage and popularity
- Notably, approximately 50% of UPI transactions involve amounts less than Rs. 200, indicating its prevalence for smaller-value payments
With the ambitious objective of facilitating billions of transactions daily, the National Payments Corporation of India (NPCI) announced a lightweight version of UPI, akin to a digital wallet. UPI Lite allows users to create a local wallet on their smartphones and add funds from their primary savings account. This further enhances the convenience and accessibility of UPI for users across various transactions.
What are the benefits of UPI Lite?
UPI Lite is an excellent solution for conducting payments at local stores. Given that the majority of transactions in this context are typically below Rs. 200, UPI Lite is perfectly suited for such scenarios. Additionally, users benefit from the advantage of having fewer entries in their bank account statements, unless they prefer to keep a detailed record of their expenditure.
It is worth noting that in the online space, only a few sectors predominantly involve transactions of less than Rs. 200. Examples include gaming, mobile recharge, and to some extent, quick commerce.
UPI Lite Benefits for Customers
- Faster and Seamless Payment experience for low ticket size transactions (upto INR 200)
- Higher Success Rates
- Less crowding of the Bank Statement with low ticket size entries
UPI Lite Benefits for Banks
- Less load on Banking Infrastructure
- Higher Success Rates
UPI Lite Benefits for Merchants
- Higher Success Rates
- No fees
The introduction of UPI Lite is expected to reduce the burden on the core banking system, leading to improved success rates for transactions. By leveraging the local wallet functionality of UPI Lite, a significant portion of transactions can be processed within the wallet itself, reducing the reliance on frequent interactions with the core banking system.
This reduced dependency on the core banking system not only enhances the efficiency and speed of transactions but also contributes to a more seamless payment experience for users. By optimising the transaction process within the UPI Lite ecosystem, the overall success rate of transactions is likely to see an improvement.
UPI Lite vs Digital Wallets
Which Banks & Apps Support UPI Lite?
NPCI’s UPI Lite started with only 8 banks in September 2022, namely, Canara Bank, HDFC Bank, Indian Bank, Kotak Mahindra Bank, Punjab National Bank, State Bank of India, Union Bank of India, and Utkarsh Small Finance Bank with Axis and PayTM Payments Bank joining the bandwagon too.
UPI Lite is currently supported by BHIM, PayTM, and PhonePe.
“UPI Lite will empower banks to process transactions at a greater scale using lesser resources, thus making the UPI platform faster, economical, and convenient. Ultimately, it’s the customer who wins with a superfast payment experience.” - Praveena Rai, COO, NPCI.
UPI Lite Payment Flow
Enabling UPI Lite
Payment via UPI Lite
Summing up
UPI has gone through a transformative journey. It began with a vision, followed by pilot programs and modifications in regulatory frameworks to facilitate its implementation. As the ecosystem surrounding UPI grew, various stakeholders, including regulators, Third-Party Application Providers (TPAPs), banks, the Government of India (GOI), merchants, and users, collectively contributed to its success story.
Now, UPI Lite embarks on its own journey. As a newer variant of UPI, it has the opportunity to evolve further and address specific needs and requirements. With time, UPI Lite will likely undergo refinements, supported by the collaborative efforts of stakeholders, ultimately shaping it into a reliable and efficient payment solution.
The journey of UPI Lite has just begun, and its future development holds promising prospects as it aims to cater to the evolving demands of users and merchants in the Indian payment ecosystem.
