Fisdom wins the Best Financial Services Partner Award - Know more ×

UPI Lite – Everything you need to know

  • Rudri Rawell
  • 23 Sep
  • 5 minutes

NPCI’s (National Payment Corporation of India) UPI (Unified Payment Interface) has fast become India’s widely accepted digital payment system as it offers a great amount of convenience and ease of use. Today, most of us can manage without cash in hand but not without UPI apps like GooglePay, Paytm, Phonepe, etc. But, if you thought that UPI was the fastest mode of payment, think again! Before the world even catches up with India’s UPI payment mechanism, we are already hopping onto UPI Lite. 

To allow more space in the core banking systems, NPCI has now launched an ‘on-device’ wallet called UPI Lite. This offline system can be used for small-value transactions. Let’s take a closer look at this new payment mechanism called UPI Lite.

What is UPI Lite?

UPI Lite

UPI Lite is being introduced to make low-denomination transactions easier and faster. Close to 75% of the net volume of retail transactions across India are observed to be under Rs. 100 each. Also, close to half of UPI transactions are of value within Rs. 200 each. Thus, UPI Lite is aimed at transactions of value under Rs. 200. 

Initially, the app will only offer debit transactions, which means you can only send money using the app. In the future, the Phase-2 launch of UPI Lite will allow credit transactions as well.

Read more: Will UPI be charged going forward?

How does UPI Lite work?

UPI Lite is an ‘on-device wallet’. This means users must first add funds from their UPI or bank accounts to this app before starting off with any transactions. One can have a maximum of Rs. 2,000 to the UPI Lite app balance at any point. 

Through UPI Lite, users can make payments even in an offline mode. However, while adding funds to the balance, an internet connection will be required. UPI Lite will allow transactions with a maximum value of Rs. 200 each. 

What’s best for users is that UPI Lite will not require a repetition of  KYC if they already have an existing UPI ID.

How to transfer funds from UPI to UPI Lite?

Anyone who wants to use UPI lite should have registered on the UPI app first. A user who has UPI can enable the UPI Lite option called “On-Device wallet” on the UPI app itself. After enabling, users can transfer funds from their bank account to UPI lite while ensuring a maximum balance of Rs. 2,000 at any point. Users will be able to add funds to UPI Lite online using additional factor authentication (AFA) or through UPI AutoPay.

Currently, one can only make debit transactions using UPI lite balance offline. Credit transactions (including refunds) will be done online and directly to the user’s bank account.

Why is UPI Lite being introduced? 

UPI has fast gained prominence over some of the traditional payment systems like IMPS (Immediate Payment Service), NEFT (National Electronic Funds Transfer), and RTGS (Real Time Gross Settlement). So far in 2022, UPI clocked 30 billion transactions with a value of a whopping Rs. 51.74 trillion.

However, it has been observed that most of the UPI transactions are much smaller as compared to the other channels. Nearly three-fourths of UPI payments are of smaller values. 

With the kind of load that the payment mechanism is handling, only a few weeks ago, UPI faced technical glitches and rejection rates were seen to be higher than normal. With UPI Lite, most of the low-value transactions can be taken offline, so that UPI gets decluttered and more efficient.

Read more : Changes to digital lending rules

How will UPI Lite help banks? 

With reduced traffic on the digital banking system, there is expected to be better availability of CBS or Core Banking System to carry out big-ticket transactions, especially on NEFT and RTGS. Thus, UPI Lite will enable banks to efficiently process payments, of both big and small value.

Which banks will support UPI -Lite?

Going forward all banks will support UPI-Lite but as a first step these banks support UPI Lite

  1. Canara Bank, 
  2. HDFC Bank, 
  3. Indian Bank, 
  4. Kotak Mahindra Bank, 
  5. Punjab National Bank, 
  6. State Bank of India 
  7. Union Bank of India, 
  8. Utkarsh Small Finance Bank

Conclusion

UPI payments facility is empowering India and Indians with faster and more efficient monetary transactions. Now, with the introduction of UPI Lite, this is slated to go a notch up, especially for small-value transactions. Both users and banks will benefit with the commencement of the UPI Lite platform.

FAQs

Who can use UPI Lite?

UPI Lite feature is available for use on the BHIM app and 8 banks have gone live with this feature. Therefore, users of Bhim app who are already registered on UPI and have accounts with one of the 8 banks can begin using the UPI Lite feature.

Do you need to be connected to the internet for UPI Lite?

To use UPI Lite, you won’t need an internet connection since all debit transactions with the value of Rs. 200 each can be carried out in offline mode. For credits, into the account, however, you need to have an internet connection. 

Will I be able to see UPI Lite transaction details in the app passbook?

UPI Lite transactions will not be visible in the user’s bank account statement or UPI passbook. However, the app will send daily SMS on the history of UPI Lite transactions of the day.

Will there be charges applicable for UPI Lite transactions?

No, just like UPI transactions, UPI Lite transactions will also not attract any charges.

author image

Rudri Rawell