What is UPI Lite?
UPI lite is an on-device wallet available within the UPI, aimed to facilitate low value transactions without using PIN/password. Aim of the UPI lite is to help faster, easy, contactless and pin/password-free payments for small value transactions like food, grocery items etc. The UPI lite was launched by the RBI in September 2022 and was designed by National Payments Corporation of India (NPCI) to optimise processing workload of banks, and at the same time for reducing transaction failures. The offline payment option under the UPI lite is also expected to reduce transaction failures.
What is the transaction limit of UPI Lite?
The RBI is upgrading the transaction limit of UPI lite. As of August 12, 2023, the limit for single payment is Rs 500 and daily total limit is Rs 2000. The high volume, low value transactions extending from Rs 1 to Rs 500 is the core area of UPI lite. Top up to the UPI lite can be made by the user.
| Single Payment Limit: You can make a single payment of up to Rs 500.
Daily Total Limit: The total daily limit for UPI Lite payments is Rs 2000. |
Where UPI Lite is available?
The UPI lite is available for all Third-Party App Providers (TPAP) like google pay, paytm, phonpe, whatsapp pay etc. It is integrated as an in-device wallet in the app (eg google pay/phone pe/paytm etc.) and can be accessed under the DP menu of the customer. Since UPI Lite is like an in-device wallet, the user should create an additional UPI ID (can be under the already existing bank account) for starting payment. In effect, the UPI lite seems like a subaccount of your already existing google pay or phonepe or paytm, available inside the app.
Another remarkable advantage of the UPI lite is that it is capable of completing payment in offline mode with the support of near field technology.
Basically, the UPI lite is designed by the National Payment Corporation to execute payments for day-to-day low value purchase items like food, groceries, milk, vegetables etc. ort payment offline as well. The fact that it removes the need for two factor authentication (PIN/password) has eased the payment interface and reduced the financial infrastructure burden for banks.
User convenience of UPI Lite
The remarkable advantage of UPI lite is that a person need not enter his PIN or Password to execute payment. By removing the need for two-factor authentication (PIN/password) for small value transactions, the UPI lite enables fast and reliable contactless payments. Use of Near Field Technology will help retail digital payments when internet / telecom connectivity is weak or not available, thereby minimising transaction declines.
What is the difference between UPI and UPI Lite?
| Feature | UPI | UPI Lite |
| Product | Real time money transfer between two accounts on a 24×7 mode. | An on-device account for real time small value transactions without necessitating two factor authentication. |
| Transaction limit | The maximum amount depends upon banks, and it may extend upto Rs. 1 lakh. A total of 20 transactions can be done from a Bank Account (inserted with the UPI account) during a time span of 24 hours. | The maximum limit for a single transaction is Rs 500 and the daily limit is Rs 2000. There is no limit for the number of transactions per day. |
| Use of PIN (Authentication) | Submission of 4 or 6-digit PIN is mandatory | No PIN is required |
| Availability | 305+ banks and all several major payment apps (TPAPs). | Several banks have inserted UPI lite. |
Working of the UPI Lite from the bank end
The UPI lite acts like a sub wallet within the UPI. As a start, fund should be added from the bank account to the UPI Lite. Top ups also can be made to the UPI Lite. It is in this respect that the UPI Lite acts like a wallet. Here, transactions made through the UPI Lite account will be deducted from the UPI Lite account and not from the linked bank account. Such an arrangement will reduce book entry burden from numerous and frequent debit entries in the bank passbook. For large volume-low value transactions related to the payment for the purchase of daily items, the transaction entries will be large. At the same time for every UPI Lite transaction, an SMS notification will be sent to the user.
In conclusion, the UPI Lite is a useful sub-wallet available with the UPI that facilitates PIN free quick and frequent small-value transactions. By eliminating the need for PIN or passcode each time, the UPI lite makes the process faster and ease. For the banks, the UPI lite reduces the burden of book entry keeping related to large volume-small value transactions.
Figure: UPI Lite page (transaction limit is not updated to Rs 500 in this picture).
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Benefits of UPI Lite · No PIN entry is needed. · No cap on number of transactions. · Contactless transactions. · Offline transactions possible. · Reduced burden for banks on book entry. |
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