"UPI Lite". What it means for YOU.

  Paytm becomes the first UPI payments App to introduce "UPI Lite" into their system and make it available for all users. UPI Lite is a digital payment option by which you can create a virtual "on-device" balance which can be used to make smaller payments. This is not to be confused with "Paytm wallet" that provided a similar service but only allowed transactions to Paytm users. UPI Lite can process payments to all UPI payment apps and can be thought of as an upgraded "Paytm wallet".

Application and goals of UPI Lite.

The National Payments Corporation of India [NPCI] launched UPI Lite during the Global Fintech Fest on September last year. The goal of UPI lite was to further promote digital payments in India and make it easier for smaller payments. NPCI has been very successful with its United Payments Interface, which is considered to be a revolutionary fintech product. It has seen massive success since its introduction in April 2016 and has been one of the key factors contributing to the success of demonetization and digitization in India. Volumes of digital payments have risen by almost 80% Year on Year in 2022. The value of all transactions on UPI is considered to be around 13 lakh crore rupees. 

However with the increase in use of UPI digital payments a new problem rose to the forefront - ease of use in smaller everyday payments. The ease of using UPI for small transactions is something all of us are familiar with. Gone are the days of having to carry cash and hoping the shopkeeper has change of 2000 ₹ note. UPI allowed all of us to rely on our phones for payments which we carried all the time and decreased our trips to the ATMs. As more and more shops started providing scanners, we relied more on UPI for smaller payments. 

This caused another problem for us. The server issue. We often found ourselves trying to look for network or cursing our banks for our failed transactions. This has caused us to be unable to buy small groceries and necessities as most of don't carry cash. Another major issue was the limited number of transactions which caused similar issues in smaller payments. Thus UPI Lite was introduced to tackle this exact problem. 

 With UPI Lite you can now have a on device balance  with unlimited transactions which is independent of your bank server and thus will never fail while trying to pay. [unless you have insufficient balance 😁]

 Here are the details and specifics of the functioning of UPI Lite which hopes to make the experience of digital payments for smaller amounts seamless and hassle free.

• UPI Lite is a virtual on device balance that can be used for smaller transactions. They have placed a limit of 200 ₹ per transaction. 
  
  
• The device balance is also limited at 2000 ₹ which can be added twice in one day. Meaning that you can add 4000 ₹ to your UPI Lite during a day but you can never have a UPI Lite balance of more than 2000₹ . 
  
  
• You do not need to enter your UPI Pin to authorize a UPI Lite payment. A SMS alert will be sent to your phone number for every transaction completed. 
  
  
• UPI Lite transactions are not reflected on your bank statements and there are no daily limits on the number of transactions in UPI Lite. 

 

The main objective of the UPI Lite payment option is to make the everyday smaller transactions simpler, easier and fail safe. A recent survey has shown that almost 50% of UPI transactions are of a value equal to or less than 50₹. Therefore with UPI Lite it decreases the load on main banking servers and streamlines the process of smaller payments. With no connection to bank servers and no limits on the number of daily transactions it aims to decrease the number of failed transactions due to bank server errors and daily transaction limits reached which accounted for almost 2% of all transactions.

Almost 70% of transactions done on UPI are below 200₹ and therefore with a proper infiltration in the user base almost half the traffic of UPI can be shifted to UPI Lite. This creates a massive advantage for the user base as UPI Lite has an almost 0% failure rate and is much more streamlined and easier to use. 

Another major advantage is that transactions on UPI Lite do not appear on the bank statements which make for much more cleaner passbooks and bank statements. Many people have reported that cluttered passbooks have caused them to be refused loans and causes other issues in financial matters and thus it is to address these issues.  

Growth and Success of UPI.

The United Payments Interface is the first and most successful interface that facilitates peer to peer (P2P) and peer to merchant (P2M) transactions. It has been a huge success in India and has helped the nation smoothly transition into the digitization and demonetization era. Almost all shops and vendors in major cities now have QR code scanners, even roadside vegetable vendors and tea stalls. The growth of UPI has been unprecedented and the Indian public seem to have embraced it with open arms. All of us who use it can testify to its ease of use and how much simpler it has made life. We cannot ignore the impact UPI had during the Coronavirus pandemic also. It helped us easily minimize cash from the economy and use digital payments which were contact less and much more safer in the times of a viral epidemic which had gripped the entire world.

These developments largely increased the user base of UPI and thus a major update was needed to address the increase in userbase. A lot of doubts had started creeping in for the reliability and overall success ceiling of UPI. However with the advent of UPI Lite and further updates and upgrades being planned it seems that the path ahead of UPI seems to be quite successful. The introduction of UPI Lite comes hot on the heels of the Budget of 2023 which put a particular emphasis on stimulation and investment in the rural economy. UPI Lite seems to be a very important step towards improving and stimulating the rural economy. 

In 2021 NPCI signed a memorandum of understanding with PPRO Financial to expand the acceptance of UPI payments in foreign countries specifically UK and China. This marked the beginning of foreign acceptance of UPI and now it is being introduced in Singapore, Malaysia, Thailand, Philippines, Vietnam, Cambodia, Hong Kong, Taiwan, South Korea, and Japan from 2022. Arab Countries have also accepted UPI and many of them including, but not limited to, UAE, and Oman accept UPI digital payments.

Other countries that accept UPI payments include France, Russia, Singapore, Bhutan, Malaysia, Nepal and Australia. There have been MoU's signed to introduce UPI in Australia, Thailand, Saudi Arabia and the USA in the coming years. 

Thus we can see that India has become the leader of digital payments interface with the best payment infrastructure in the world that all other nations are flocking towards. UPI Lite is just another step taken to further improve this infrastructure and increase its volumes and improve its user experience. NCPI is now aiming towards making UPI Lite independent of internet services meaning we could make offline UPI Lite payments in the future. It seems to be an interesting and proud time to be an Indian. 

Written by Ariyaan Moktan