The digital payments industry in India is witnessing exceptional growth. Over the last five years, the volume of digital payments in India increased at an average annual rate of 50%. Its expansion, especially in the United Payments Interface (UPI), has been even more significant – a whopping 160% annually (Source). Being the cornerstone of retail payment digitalisation, it is only obvious that there will be newer innovations surrounding UPI.
In September 2022, the Reserve Bank of India launched UPI Lite, a digital account designed by the National Payments Corporation of India (NPCI) to facilitate faster and easier transactions for low-value transfers. UPI Lite is a distinguished feature that will make regular transactions like payments for low-value shopping such as groceries or low-priced single items smooth and fast.
What is UPI Lite?
UPI Lite is a digital account designed to facilitate low-value transactions. This feature will make small ticket transactions easier and quicker. The maximum UPI Lite transaction limit is Rs 200. Paytm, a leading player in the market, has introduced UPI Lite which enables users to carry out transactions up to Rs. 200, with a maximum cumulative limit of Rs. 4000.
- The UPI Lite app has a maximum balance limit of Rs 2000 at any given time.
- A maximum of Rs 2000 can be added to the UPI Lite account twice daily.
- This allows for a cumulative transaction limit of Rs 4000 in a day.
- Users can make multiple transactions within the maximum UPI Lite transaction limit.
A user can load Rs 2000 in the UPI Lite app and utilize the available balance to conduct transactions until it is fully utilized. The maximum allowed value per transaction is Rs 200. Therefore, a user can make multiple transactions until the limit is reached. For example, a user may conduct 6 transactions worth Rs 200, 4 transactions worth Rs 150, and 20 transactions worth Rs 10 in a day, exhausting the UPI Lite transaction limit of Rs 2000. However, if the user requires further transactions on the same day, they may add another Rs 2000 to their UPI Lite account. In addition, UPI Lite streamlines the transaction process by eliminating the need to enter a 4 or 6-digit PIN.
Need for UPI Lite
Launched in April 2016, UPI was perceived to become the keystone of digital payments. The transactional value and volume of UPI are exponentially rising. As per the January 2023 estimates of NPCI, the UPI transaction volume is above 8 million and worth Rs 12,98,726.62 crores.
UPI and UPI Lite are both exceptional payment systems that facilitate a seamless transaction process. Transactions involving everyday items such as groceries, milk, vegetables, and food are commonly regarded as low-value transactions. UPI’s ability to efficiently handle a considerable load of these transactions is impressive. However, to make the process even smoother, NPCI has introduced UPI Lite. It is a compressed version of UPI that is designed to handle high-volume, low-value transactions that range from Re. 1 to Rs. 200. This innovation has improved the overall performance of the UPI system, allowing it to handle higher-value transactions more efficiently. Additionally, UPI Lite retains the convenience and speed of UPI while being more compact, providing users with an excellent payment experience.
How Does UPI Lite Work?
Paytm, a pioneer in digital payment apps, has recently introduced UPI Lite as a new feature into the Paytm application. The purpose of this feature is to simplify small-value transactions and make them more efficient for users. With a transaction limit of Rs. 200, users can make quick and frequent payments without the need to enter a PIN or passcode for each transaction. This feature is especially useful for people who need to make multiple payments regularly, as it saves time and makes the process smoother.
Users can activate UPI Lite on the Paytm app by linking the bank account that supports this feature. Once the linking process is complete, users can add funds up to Rs. 2000, and a maximum of Rs. 4000 per day to their UPI Lite account. Transactions made through the UPI Lite account will be deducted from the UPI Lite account and not from the linked bank account. This will reduce the number of frequent debit entires in the bank passbook, resulting in a simplified record of transactions. It’s worth noting that every time a transaction is carried out through UPI Lite, an SMS notification will be sent to the user.
In conclusion, UPI Lite is a useful feature for people who need to make quick and frequent small-value transactions. It eliminates the need for entering a PIN or passcode each time, making the process faster and more convenient. By enabling UPI Lite through payment applications that support this feature, users can enjoy the benefits of digital payments without the hassle of traditional payment methods.
Advantages of UPI Lite
Here are some of the significant benefits of UPI Lite:
- Less Clutter on Bank Passbook – When small-value transactions, which are frequent and high-volume, will be made using UPI Lite, there will be fewer transaction details on the bank Passbook. It will comprise only the major and top-up transactions done using UPI Lite. Hence, users can have a relatively clean and decluttered Passbook.
- Easy Small Value Transactions – This advantage of UPI Lite will cater to the daily transactional requirements of the common people. Small purchases ranging from Re 1 to Rs 200 that are a part of daily routine will become faster and more convenient.
- No Cap on Number of Transactions – There is no cap on the number of transactions a user can make using UPI Lite. Since there is no restriction on the number of transactions, given the cumulative daily amount, a user can make multiple payments of a low amount.
- Use Without PIN – With UPI Lite, users are not required to enter a 4 or 6-digit PIN like they would with other payment methods such as debit or credit cards, or net banking. This means that for small, regular transactions, users can avoid the hassle of entering a PIN.
UPI Lite will make low-value transactions a very swift, hassle-free and quick process. Once the UPI Lite Account is loaded, at a time, users can make instant payments of Rs 200. With a cumulative maximum daily value of Rs 4000, users can make as many transactions as they want. All they have to do is access their UPI LITE Account and make the payment. The fact that users would not have to feed any PIN makes transactions using UPI Lite even more preferable. Download the Paytm application and get to know a lot more about UPI Lite.