Unified Payments Interface (UPI) has revolutionized business and consumer payments, connecting numerous bank accounts under one or more apps. The convenience, efficiency, and effective fund routing have transformed the Indian payment landscape.
However, despite its popularity, UPI has some drawbacks:
1. Increased Failure Rates: UPI heavily relies on technology and mobile networks, making it susceptible to payment failures, especially in no-network areas.
2. Low-Value Transactions: UPI is often used for both small and high-value transactions. The problem arises when numerous low-value transactions clutter your bank statements.
3. Direct Connection to Bank Account: UPI payments establish a direct link to your bank account, lacking robust encryption, which can pose security risks.
To address these issues, the National Payments Corporation of India (NPCI) introduced “UPI Lite,” an on-device wallet designed for small-value payments. Here’s everything you need to know:
What is UPI Lite?
UPI Lite is an offline wallet created by NPCI to enable small-value offline payments, specifically for transactions below Rs 200. While you need an internet connection to load the wallet with a maximum of Rs 2000, you can use it for payments offline.
Key Features of UPI Lite:
Offline Usage: UPI Lite can be used without an internet connection. Loading money into the wallet requires internet access.
Low-Value Transactions: You can make payments of up to Rs 200 offline.
Limited Bank Support: UPI Lite is currently available to customers of eight banks, including Canara Bank, Indian Bank, HDFC Bank, Kotak Mahindra Bank, State Bank of India, Punjab National Bank, Union Bank of India, and Utkarsh Small Finance Bank.
No PIN Required: Unlike standard UPI transactions, UPI Lite does not require a PIN for low-value payments.
Transaction Records: Transactions made using UPI Lite won’t appear in your bank statement or passbook. Instead, you’ll receive a daily SMS summarizing your payment history.
Benefits of UPI Lite:
Improved Success Rate: UPI Lite offers a higher success rate for payments under Rs 200
Reduced Infrastructure Load: It places less load on remitting banks.
Cleaner Payment Records: Your bank statements and passbooks remain uncluttered, making it easier to track payments.
How to Transfer Funds from UPI to UPI Lite:
To enable UPI Lite, you need to have access to the UPI app. If you’re a pre-registered UPI app user, you can set up UPI Lite. After enabling it, you can allocate funds from your main app to the UPI Lite wallet. As of now, the Lite app only supports debit transactions, with credits processed online in your bank account.
Differences Between UPI Lite and Digital/Mobile Wallets:
Issued by: UPI Lite is issued by TPAP and banks, while digital wallets are issued by PPI-licensed entities like Paytm, Google Pay, and others.
KYC Requirements: UPI Lite doesn’t require KYC, whereas digital wallets may require minimum or full KYC depending on the provider.
Funds Availability: UPI Lite holds funds in an escrow-type bank account, while digital wallets use escrow accounts within the issuing bank.
Interest on Balance: Neither UPI Lite nor digital wallets provide interest on the balance.
Maximum Wallet Balance: UPI Lite has a maximum balance of Rs 2000, while digital wallets vary between Rs 10,000 and Rs 2,00,000.
Loading Method: UPI Lite loads funds from bank accounts linked to your UPI accounts, while digital wallets accept funds through credit cards, debit cards, and net banking.
Setting Up UPI Lite on BHIM App:
To enable UPI Lite on the BHIM app, click the UPI Lite icon, agree to the terms and conditions, and add funds from your desired bank account. The wallet balance will be displayed in the app. You can then make payments with ease.
In conclusion, UPI Lite is a practical solution for low-value transactions, offering seamless and secure payments. While credit transactions are not currently supported, they may be added in the future. Until then, enjoy the convenience of debit transactions with UPI Lite.