After introducing 123Pay by Reserve Bank of India (RBI) to enable UPI payments for feature phones, NPCI is improving the underlying technology further to provide better payment solutions without being dependent on the availability of the Internet.

To facilitate small-value transactions over online mediums, the National Payments Corporation of India (NPCI) has announced UPI Lite. Let’s understand what the on-device wallet is and how it can disrupt the Indian market.

Credit: NPCI

UPI Lite: An Offline Digital Wallet 

Through an official circular, NCPI informed all its partnered banks about the launch of an on-device, offline wallet. UPI Lite is going to work in a similar fashion to that of Paytm or Mobikwik. UPI Lite can facilitate offlinesmall-value transactions, that are going to reflect similar functionalities to that of RBI’s offline UPI payment services.

The UPI Lite is going to be an additional service on top of UPI apps. Users can make transactions directly via their bank accounts, much similar to how traditional UPI works. Although an on-device wallet is going to store the funds, within the common library against the user’s UPI app.

How UPI Lite Will Work? 

According to NCPI, UPI Lite is going to process their transactions initially with a ‘near offline mode.’ In other words, all debit payments will be recorded offline by the on-device wallet. Once the user comes online, it will update the credit payments.

Although, NCPI aspires to eventually make both debit and credit transactions offline. Initially, NCPI is going to put transaction limits over UPI Lite. Using the wallet, users can only facilitate transactions up to 200 INR.

The total fund limit is also capped at 2000 INR. But the stored fund is going to be non-interest bearing. That means users don’t have to pay additional fees for storing funds. Depending on the total number of UPI apps, users can maintain UPL Lite balances accordingly.

NCPI mandates that users need to be online while adding funds to UPI Lite. To add funds, users need to verify through AFA (Additional Factor Authentication). Similarly, the UPI AutoPay feature is also there to add funds automatically, once the fund balance starts to run low.

The Bottom Line 

Bear in mind, there is no information on the exact launch timeline for the UPI Lite wallet. But, in the coming months, we can expect UPI Lite to hit the Indian market, alongside payment options for feature phones. So, it is not a thought for the unforeseeable future, how UPI Lite is going to make more people join the digital payments movement? 

Tathagata is a avid lover of sci-fi films and technology. An aspiring electrical engineer and a passionate technical writer. He is very friendly, realist and always on the hunt for latest technological advancements.

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