RBI Raises UPI Lite Payment Limit To Rs 500 From Rs 200 Using NFC

The Reserve Bank of India (RBI) on Thursday informed that it has raised the transaction limit for UPI Lite from Rs 200 to Rs 500. The National Payments Corporation of India (NPCI) and RBI unveiled UPI Lite, a condensed version of the original UPI payment system, in September 2022.

The goal of UPI Lite is to make it possible for users to perform small-value transactions without having to deal with the sporadic processing issues that banks experience. More than ten million transactions are processed each month thanks to the product's growing popularity.

"With the objective of harnessing new technologies for enhancing the digital payments experience for users, it is proposed to (i) enable "Conversational Payments" on UPI, which will enable users to engage in conversation with AI-powered systems to make payments; (ii) introduce offline payments on UPI using Near Field Communication (NFC) technology through 'UPI-Lite' on-device wallet; and (iii) enhance the transaction limit for small value digital payments in off-line mode from ₹200 to ₹500 within the overall limit of ₹2000 per payment instrument. These initiatives will further deepen the reach and use of digital payments in the country," said RBI Governor Shaktikanta Das.

UPI Lite transactions have a ceiling of Rs 500 each, as opposed to conventional UPI transactions, which have a daily limit of Rs 1 lakh. At first, it cost 200 rupees.

"To promote the use of UPI-Lite, it is proposed to facilitate offline transaction using Near Field 4 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," the RBI said in a statement.

RBI kept the repo rate unchanged at 6.5% following a unanimous decision at the three-day monetary policy committee meeting.

"Monetary Policy Committee decided unanimously to keep the Repo Rate unchanged at 6.50," RBI Governor Shaktikanta Das said in a press conference.

Ms. Anitha Rangan, Economist, Equirus on RBI Monetary Policy Announcement, "While in line with consensus RBI has kept its policy rate unchanged, in view of the surplus liquidity and perhaps to deliver an implicit hike (of lesser impact), RBI has temporarily increased the CRR levels by 10% of incremental NDTL of banks. This in effect takes out the 10% of surplus in the accumulated from INR 2000 note withdrawal and FX operations (~INR 300-350 bn). Notably, inflation estimates, especially near term estimates (Q2, Q3) have been revised upwards meaningfully, while growth estimates are retained. Furthermore, Q1FY25 inflation estimate of 5.2% and governor reiterating, commitment to align to 4% on a durable basis, suggests that rate cuts are out of way beyond the near term. Higher for longer is not just for the external world but also for India. Domestic growth resilience is countered by external risks and inflation. RBI is not ruling out hikes if necessary, clearly cuts are out of sight."

Akash Sinha, CEO & Co-Founder, Cashfree Payments, said, "The Reserve Bank of India (RBI) has once again emphasised the significance of promoting digital payments in its latest Monetary Policy announcement. By proposing innovative concepts such as Conversational Payments and Offline capability on the Unified Payments Interface (UPI), the Central Bank is wholeheartedly advocating the integration of cutting-edge technologies like Artificial Intelligence (AI) and Near Field Communication (NFC) through 'UPI-Lite' on-device wallet, within the realm of payments.

In a broader context, the Central Bank's concerted efforts to enhance the adoption and effectiveness of digital payments are fostering a robust and competitive environment for all stakeholders involved. Moreover, the ingenuity and progress achieved in India's digital payments landscape are poised to strengthen our global standing, particularly concerning UPI and digital payments. This collective advancement is set to elevate India's stature on the global stage, underscoring our nation's prowess and leadership in the realm of innovative payment solutions."