NPCI Launches UPI Lite For Small-Ticket Offline Digital Payments; Here’s How It Works

The National Payments Corporation of India (NPCI) has launched the UPI Lite service to enable people to conduct offline payments using its network earlier this week. UPI Lite follows the framework introduced by the Reserve Bank of India (RBI) for facilitating small-ticket digital payments in the offline mode.

It may be noted that UPI processed 4,527.49 million transactions worth Rs 8,26,843 in February 2022 but all these were online, leaving people without internet connectivity out of the ecosystem.

How Does UPI Lite Work?

Initially, you will need Internet connectivity and a SIM card with an SMS outgoing facility for registering with UPI, but you can do without it later.

After successfully registering with UPI, you will see an option to enable UPI Lite. Click that and then transfer some funds from your bank account to this UPI Lite account.

This balance in the UPI Lite account will be held in your bank’s escrow/pool/designated account. In essence, this UPI Lite is like a non-interest-bearing wallet. You will be able to see your UPI Lite account balance at any moment, right on the home screen of your UPI app.

A user can have as many UPI Lite accounts as registered with his bank account. For example, if you are using five UPI apps for accessing your bank account, you can open a UPI Lite account for all five of them. By default, all transactions below Rs200 will be processed using UPI Lite for the user’s convenience. 

How To Use UPI Lite For Transactions?

At present, NPCI has enabled only payments (debit) transactions in the offline mode, but support for credit transactions is expected to be introduced in the future.

As of now, the transaction limit for a single payment is a maximum of Rs 200 (excluding peer-to-peer payments), and you can store up to Rs 2,000 in your UPI Lite account.

All UPI Lite transactions shall be offered without the need for entering your UPI PIN, which means there’s no additional authentication. However, NPCI has recommended that you should access your UPI app using device authentication through your device (biometric, pattern, PIN, face unlock, etc.).

NPCI has also stated that RBI’s Harmonisation of Turnaround Time rules will also be applicable for UPI Lite transactions. This rule states that every failed transaction in UPI, IMPS, prepaid cards and others shall be auto reversed with or without the customer’s complaint within the transaction date plus five days. If the customer’s bank fails to do this, it needs to pay a penalty of Rs100 per day to the affected customer.