In September 2022, the Reserve Bank of India (RBI) introduced UPI Lite to streamline small-value payments. This was done to ensure reliable and convenient small UPI transactions, thus minimising payment failures. UPI Lite is designed to simplify regular transactions for low-value shopping, such as groceries or inexpensive single items.
The National Payments Corporation of India (NPCI) has introduced an on-device wallet feature, which allows you to store money on your smartphone for seamless transactions.
Let us understand what is UPI Lite, how to use UPI Lite, how it works and examples of it.
Table of Contents
What is UPI Lite?
UPI Lite is an on-device wallet introduced by the NPCI to streamline small-value payments, typically below Rs. 500, without requiring the use of a UPI PIN. It was developed in response to the growing demand for efficient small-ticket transactions, where the UPI (Unified Payments Interface) infrastructure can sometimes become congested during peak loads.
UPI Lite offers UPI features, such as scanning of UPI QR codes, and transfers to Virtual Payment Addresses (VPAs), UPI IDs, phone numbers and bank accounts. It is designed to ensure quick and reliable transactions, even during high UPI traffic, reducing the risk of payment failures. The maximum transaction limit for UPI Lite is set at Rs. 500, with the option to add funds up to Rs. 2,000. It keeps transaction records organised within the app, providing you with a convenient overview of your payments.
Notably, UPI Lite also anticipates an offline payment mode, although specific details about this feature remain unclear for now. This makes UPI Lite a promising addition to the UPI payment gateway, offering hassle-free, low-value transactions for users in India.
Read More About: UPI Transaction Charges: Limits Per Day & Guidelines
How Does UPI Lite Work?
UPI Lite operates similarly to a wallet within the UPI payment gateway, offering a convenient way for users in India to make small-value transactions. You can activate UPI Lite within supported apps and easily add funds up to Rs. 2,000, via your UPI account.
One of the key distinctions of UPI Lite is that it enables you to accept UPI payments and make payments below Rs. 500 without the need for a UPI PIN. Unlike traditional wallets, UPI Lite directly transfers funds to the receiver’s UPI account, eliminating the need for an intermediary wallet balance.
This shift reduces the strain on banks’ Core Banking Systems (CBS) during peak UPI loads, which are typically reserved for high-value transactions. Essentially, UPI Lite streamlines the core banking process, shifting most of the transaction handling process from banks to UPI apps. This makes small-value payments more efficient and user-friendly within the UPI payment gateway.
Read More About: What is a Payment Gateway and How Does it Work?
Benefits of UPI Lite
- Hassle-free small-value payment gateway: With UPI Lite, you can make quick payments for small-ticket items without the need for a UPI PIN.
- Reliable transactions: Despite peak loads on the UPI infrastructure, UPI Lite ensures that transactions below Rs. 500 are processed efficiently and reliably.
- Versatility: UPI Lite allows you to scan and pay using UPI QR codes or transfer funds via VPAs, UPI IDs, phone numbers and bank accounts.
- Organised transactions: All your transactions made through UPI Lite are organised within the app, making it easier for you to track your payment history. This also reduces the mess on bank passbooks.
- No limit on transactions: There is no cap on the number of daily transactions you can conduct via UPI Lite, as long as the value remains within the cumulative daily limit (Rs. 4,000).
The convenience of UPI Lite makes it an ideal solution for businesses that deal with frequent small-value transactions. Whether you run a retail store or provide services like food delivery / transportation, accepting UPI payments through UPI Lite can streamline your payment process and enhance customer satisfaction.
Difference between UPI and UPI Lite
Parameter |
UPI |
UPI Lite |
| Definition | UPI is a real-time payment system that allows you to transfer money between bank accounts using your mobile phone. | UPI Lite refers to a simplified version of UPI designed for users with basic or feature phones and limited internet connectivity. It aims to provide essential UPI functionality on devices with lower specifications. |
| Functionality | It offers a wide range of use cases, including peer-to-peer (P2P) money transfers, bill payments, mobile recharges, online shopping, and more. | It typically provides basic P2P money transfer functionality and balance inquiry. It may not support advanced features like bill payments or shopping. |
| App Size and Data Consumption | UPI apps are generally larger and may consume more data due to the inclusion of various features and functionalities. | UPI Lite apps are designed to be smaller in size and consume less data, making them suitable for users with limited storage and internet access. |
| User Interface | UPI apps often have a more feature-rich and user-friendly interface with a wide range of options and settings. | UPI Lite apps have a simpler and more minimalist interface, focusing on essential functions and ease of use. |
| Device Compatibility | UPI apps are typically designed for smartphones with modern operating systems (Android and iOS). | UPI Lite is intended for use on basic or feature phones that may not have advanced operating systems. It may rely on USSD (Unstructured Supplementary Service Data) technology for communication. |
| Customisation and Settings | UPI apps offer more customisation options and settings for users to personalise their experience. | UPI Lite apps have fewer customisation options and settings due to their simplified nature. |
| Updates and Features | UPI apps receive regular updates and often introduce new features and improvements. | UPI Lite apps may receive fewer updates and may focus on maintaining core functionality rather than adding new features. |
| Target Audience | It is designed for a broad range of users, including those with smartphones and access to high-speed internet. | It primarily targets users with basic phones and limited internet access, such as those in rural areas or with low-end devices. |
Conclusion
UPI Lite streamlines low-value transactions, making them quick and hassle-free. With UPI Lite, you can instantly make payments of up to Rs. 500 from your account. The maximum cumulative daily transaction value is Rs. 4,000. This allows you to make multiple small payments throughout the day.
One of the key benefits of UPI Lite is the convenience it offers, as you do not need to enter a PIN for transactions. This simplifies the payment process and enhances user experience.
Frequently Asked Questions (FAQs)
1. Is UPI Lite safe or not?
UPI Lite is designed with security measures to ensure safe transactions, but its security may be limited compared to the full UPI system due to the constraints of basic phones and connectivity options.
2. What is the maximum limit in UPI Lite?
The UPI Lite transaction limit is Rs. 4,000 per day.
3. How do I transfer money back from UPI Lite?
To transfer money back from UPI Lite, you typically follow the same process as sending money, entering the recipient’s details and the amount, but in this case, you would send it to your bank account or UPI ID.
4. Can UPI Lite be used offline?
No, UPI Lite typically relies on basic phone connectivity, such as USSD, and requires a network connection for transactions. Hence, it cannot be used without a network connection. It might work without an internet connection though.
5. Which banks support UPI Lite?
Several banks in India support UPI Lite, but the availability and support for UPI Lite can vary over time, so it’s advisable to check with individual banks or the NPCI.
