RBI launches New UPI features: Conversational Payments via UPI; Raises per transaction limit for UPI Lite

The Unified Payments Interface(UPI), India’s preferred digital payment mechanism, is getting a big upgrade with numerous new features. Conversational Payments, a novel way to make payments by chatting with AI-powered platforms, is the most prominent of them.

But wait, there’s more to know. RBI Governor Shaktikanta Das, at the Monetary Policy Committee meeting on Thursday, revealed further new features for UPI. Here’s a quick rundown.

Conversational Payments in UPI

With its simplicity of use, safety and security, and real-time functionality, UPI has changed India’s digital payment environment. The addition of numerous additional functionalities throughout time has enabled UPI to meet the economy’s diversified payment demands. As Artificial Intelligence (AI) becomes more integrated into the digital economy, conversational instructions have enormous promise for improving the ease of use, and hence the reach, of the UPI system.

It is, therefore, proposed to launch an innovative payment mode viz., “Conversational Payments” on UPI, that will enable users to engage in a conversation with an AI-powered system to initiate and complete transactions in a safe and secure environment.

This channel will be made available via both smartphone and feature phone-based UPI channels, assisting in the country’s digital penetration. The service will first be offered in Hindi and English, with other Indian languages to follow. NPCI will be given instructions shortly.

Offline Payments in UPI

To speed up small-value UPI transactions, an on-device wallet named “UPI-Lite” was released in September 2022 to optimise processing resources for banks, minimising transaction failures.

The system has gained popularity and now handles over ten million transactions every month. To encourage the usage of UPI-Lite, it is recommended to leverage Near Field Communication (NFC) technology to ease offline transactions. This functionality will not only enable retail digital payments in scenarios where internet / telecommunications access is poor or non-existent, but it will also assure speed with minimum transaction rejections. NPCI will be given instructions shortly.

Enhancing Transactions limits for Small Value Digital Payments

A limit of Rs.200 per transaction and an overall limit of Rs.2000 per payment instrument has been prescribed by the Reserve Bank for small value digital payments in offline mode including for National Common Mobility Card (NCMC) and UPI Lite.

These channels enable quicker, more reliable, and contactless payments for everyday small value purchases, transit payments, and so on by removing the need for two-factor verification for small value transactions. Since then, there have been calls to expand these restrictions.

To encourage wider adoption of this mode of payments and bring in more use cases into this mode, it is now proposed to increase the per transaction limit to Rs.500.

However, the aggregate limits is kept at 2000 to mitigate the risks associated with the relaxation of two-factor authentication. In this respect, instructions will be released shortly.