Migrating low-ticket payments to UPI Lite key to easing system pressure

UPI Lite allows low-value transactions without requiring a PIN and are carried out without utilising a remitter bank's core banking systems

The Unified Payments Interface (UPI) ecosystem is looking at a strategy to migrate low-ticket transactions to UPI Lite as financial institutions such as banks and fintechs continue to operate at full capacity.

 

This comes as the industry looks to contain technical declines and transaction failures on UPI.

 

These declines, which were 8-10 per cent in 2016, have come down to less than 0.7 per cent in 2024, Dilip Asbe, managing director (MD) and chief executive officer (CEO), National Payments Corporation of India (NPCI), said. 

 

“Over a period, there has been a lot of effort from the ecosystem, especially banks, to scale up infrastructure. As time passes, low-ticket transactions must be migrated to UPI Lite. This is the strategy that I think the overall ecosystem is looking at,” Asbe said at the 11th SBI Banking & Economics Conclave 2024. 

   

His comments come as bank's servers and fintechs operate at full capacity to execute a transaction during peak hours despite associated costs in the absence of a zero merchant discount rate (MDR) on UPI payments. 

 

At present, India has a base of over 400 million unique users who use the UPI for real-time payments. 

 

The UPI Lite feature enables low-value transactions without requiring a UPI Pin. It is carried out without utilising a remitter bank’s core banking systems in real time, according to the NPCI. 

 

In October, the Reserve Bank of India (RBI) increased the UPI Lite wallet limits, raising the per-transaction cap from Rs 500 to Rs 1,000 and the overall wallet limit from Rs 2,000 to Rs 5,000.

 

Asbe added that access to cheaper smartphones, a preference for offline digital transactions, and payments on feature phones that are powered by voice commands would enable the next set of unique users to use UPI for their payments. 

 

“Every Indian must have a cheaper smartphone and an open ecosystem. I believe that in the next five to seven years, we can look at every Indian digitally connecting with financial services,” he added. 

 

There were 16.58 billion UPI transactions worth Rs 23.5 trillion in October, data from the NPCI shows.    

UPI Lite advantages 

- Supports low-value transactions without a UPI PIN or reliance on banks’ core systems

- RBI raised UPI Lite limits in October

- Per-transaction cap: Rs 1,000 (from Rs 500)

- Wallet limit: Rs 5,000 (from Rs 2,000).