The year 2022 witnessed a significant surge in the number and worth of UPI (Unified Payments Interface) transactions. In September 2022, the Reserve Bank of India (RBI) introduced a new payment system called UPI Lite. UPI Lite is a simplified version of the original UPI payment system and has been launched to cater to the needs of users who perform small-value transactions on an everyday basis.
In this blog, we will highlight the unique benefits of both UPI and UPI Lite payment systems and how they cater to the varying needs of users.
UPI vs UPI Lite
Outlined below are the differences between UPI (Unified Payments Interface) and UPI Lite.
| Particulars | UPI | UPI Lite |
| Product | This is a 24×7 payment system for real-time transfer of money between two bank accounts | This is an on-device account where the transaction takes place between the sender’s UPI Lite account and the receiver’s bank account in real time. |
| Transaction limit | The maximum amount that can be transferred in a day from a Bank account is Rs. 2 Lakhs. A total of 20 transactions can be done from a Bank account in a span of 24 hours. | Maximum amount that can be transferred from a UPI Lite account in a span of 24 hours is Rs. 4000. There is NO limit to the number of transactions done through UPI Lite.The maximum limit of a transaction is Rs 200. |
| Fund transfer | Money can be sent and received through UPI | Currently, only money can be sent using UPI Lite. Any credit or refund will be made to the user’s linked bank account. |
| Use of PIN | For every transaction, the user has to key in the 4 or 6-digit PIN | No PIN is required to send money using UPI Lite |
| Checking transaction history | Every transaction will be recorded in the Bank’s passbook and also in Paytm’s Balance and History section | The Paytm’s Balance and History section enables users to review all of their transaction records. Additionally, on a daily basis, users will receive an SMS from the bank that consolidates a statement of all transactions performed during the day. |
| Availability | 300+ banks and all major payment apps | Currently, 9 banks and only 2 payment apps, namely Paytm and BHIM |
What is UPI Lite?
UPI Lite is an on-device feature that facilitates quick and hassle-free instant small-value transactions. Presently, 9 banks provide this feature. Paytm has recently become the first prominent payment application to introduce UPI Lite. With Paytm’s UPI Lite, users can carry out small-value transactions with just one tap. This feature will ensure the speedy processing of routine small-ticket transactions even during peak hours without any failures. UPI Lite is a digital payment system that makes it quicker and simpler to manage your finances.
To make payments through UPI Lite, money has to be loaded to UPI Lite Account from the user’s linked bank account. This UPI Lite balance can be used to make small transactions of Re 1 to Rs 200.
- How UPI Lite works: UPI Lite works by adding money to the UPI Lite account through the linked bank account. once done, the user can complete transactions of upto Rs. 200 using the UPI Lite account balance. Users can add up to Rs 2,000 twice a day to UPI Lite account, resulting in a cumulative daily usage limit of up to Rs 4,000.
- Transaction limit: When using UPI Lite, you can make real-time transactions up to Rs 200. The maximum you can keep in your UPI Lite account at any time is Rs 2000, but you can add up to Rs 2000 twice a day, which brings the maximum daily limit to Rs 4000.
- Fund credit: Currently, debits, i.e., payments, can be made using UPI Lite. The amount will be transferred directly to the user’s bank account for credit and refunds.
- Viewing UPI Lite transaction history: The transfer of funds from the linked bank account and UPI Lite account will be available on the payment app transaction history. Additionally, users will receive a daily SMS statement summarizing all UPI Lite transactions conducted during the day.
Note: Lite users have the option to close their account at any time or transfer funds from their Lite account to their bank account with a single click, and without incurring any fees.
What is UPI?
UPI is an around-the-clock payment system that can be used to transfer funds in real time. As per the data estimates of the National Payments Corporation of India (NPCI), there are currently more than 385 UPI live members comprising banks and Prepaid Payment Instruments (PPIs) that facilitate UPI payments in the country.
To transfer money through UPI, a user needs a smartphone, a reliable UPI application such as Paytm and a virtual ID. This UPI ID allows for real-time transfer of funds through multiple methods such as bank account details, mobile number, or QR code scanning.
- How UPI works: To perform transactions using UPI, it is necessary for the user to have a reliable UPI application, such as Paytm. Upon opening the application, the user can then choose to enter the recipient’s mobile number, UPI ID, or scan their QR code. Once that’s done, the user needs to specify the amount and select a payment option from the available ones, and then proceed to complete the transaction.
- Transaction limit: Currently, the upper limit of fund transfers in UPI is Rs 2 lakh.
- Transfer Funds: Sending or receiving money through UPI is possible by simply using a mobile number. However, users can also opt to use their UPI ID or bank details to complete transactions. In this way, UPI provides multiple options for users to conveniently transfer funds.
- Viewing UPI transaction history: Users can check the transaction history in the UPI-supporting app on their smartphones by clicking on the “transaction history” tab.
Conclusion
Identifying the difference between UPI and UPI Lite reflects that while UPI remains one of the most popular instruments of digital payments, UPI Lite adds to it. It not only allows faster and hassle-free transactions but also augments the bandwidth of UPI. While the operational process, transaction limits, and purpose of the feature differ, it is interesting to note how UPI Lite compliments UPI and streamlines the whole payment process making it more efficient and seamless.
