RBI launches conversational, offline payments via UPI; raises UPI-lite limit to ₹500 per transaction

Reserve Bank of India Governor Shasikanta Das during the Monetary Policy press conference at the RBI Headquarters on Thursday.
| Photo Credit: Emmanual Yogini

The Reserve Bank of India on August 10 proposed to increase the per transaction payment limit to ₹500 for UPI Lite in offline mode and announced other measures to further deepen the reach and use of digital payments in the country.

Presently, a limit of ₹200 per transaction and an overall limit of ₹2,000 per payment instrument has been prescribed by the Reserve Bank for small value digital payments in offline mode, including for National Common Mobility Card (NCMC) and UPI Lite.

By removing the need for two-factor authentication for small value transactions, these channels enable faster, reliable, and contactless mode of payments for everyday small value payments, transit payments etc.

Explained | Daily limit on UPI transactions 

“Since then, there have been demands for enhancing these limits. To encourage wider adoption of this mode of payments and bring in more use cases into this mode, it is now proposed to increase the per transaction limit to ₹500,” RBI Governor Shaktikanta Das said.

The overall limit is, however, retained at ₹2,000 to contain the risks associated with relaxation of two-factor authentication and instructions in this regard will be issued shortly, he added.

Conversational Payments on UPI

With the objective of harnessing new technologies for enhancing the digital payments experience for users, Mr. Das said, it is proposed to enable ‘Conversational Payments’ on UPI, which will enable users to engage in conversation with AI-powered systems to make payments and introduce offline payments on UPI using Near Field Communication (NFC) technology through ‘UPI-Lite’ on-device wallet.

UPI, with its ease of usage, safety and security, and real-time feature, has transformed the digital payment ecosystem in India. Addition of many new features over time have enabled UPI to facilitate diverse payment needs of the economy.

As Artificial Intelligence (AI) is becoming increasingly integrated into the digital economy, conversational instructions hold immense potential in enhancing ease of use, and consequently reach, of the UPI system, he said.

It is, therefore, proposed to launch an innovative payment mode viz., ‘Conversational Payments’ on UPI, that will enable users to engage in a conversation with an AI-powered system to initiate and complete transactions in a safe and secure environment, he said.

This channel will be made available in both smartphones and feature phones-based UPI channels, thereby helping in the deepening of digital penetration in the country, he said.

The facility will, initially, be available in Hindi and English and will subsequently be made available in more Indian languages and instructions to NPCI will be issued shortly, he added.

To increase the speed of small value transactions on UPI, an on-device wallet called ‘UPI-Lite’ was launched in September 2022 to optimise processing resources for banks, thereby reducing transaction failures.

The product has gained traction and currently processes more than ten million transactions a month.

“To promote the use of UPI-Lite, it is proposed to facilitate offline transaction using Near Field Communication (NFC) technology. This feature will not only enable retail digital payments in situations where internet/telecom connectivity is weak or not available, it will also ensure speed, with minimal transaction declines. Instructions to NPCI will be issued shortly,” he said.