What is UPI Lite: Everything you need to know

Reserve Bank of India launched UPI Lite to facilitate faster and seamless low value transactions of Rs. 200 or below without entering UPI PIN.

In September 2022, the Reserve Bank of India introduces UPI Lite. UPI Lite is simplified version of UPI (Unified Payments Interface) designed by the National Payments Corporation of India (NPCI) to make small UPI transactions easier and faster. As per NPCI circular, 50% of total UPI transactions are having transaction value of below Rs 200. And these billions of small transactions are increasing transactions traffic across the banks and because of that sometimes user’s payment get stuck that resulting in substantial investments required to upgrade the NPCI & Bank’s infrastructure. So, to solve these issues and initiate instant payment UPI Lite was introduced. And Paytm became the first digital payments bank to integrate UPI Lite into its platform.

What is UPI Lite?

UPI Lite is an On-Device Wallet designed to facilitate low-value transactions Rs. 200 or below without entering UPI PIN.

UPI Lite key features

UPI Lite introduced with a lot of unique features that UPI and other payments app doesn’t have. Let’s explore these features below-

• UPI Lite enable users to make small value payments below Rs.200 without entering PIN.
• With UPI Lite users can make offline payments even by scanning QR code.
• The limit of single transaction amount through UPI Lite is from Rs.1 (minimum) to Rs.200 (maximum).
• Maximum balance limit for On Device wallet is Rs. 2000 at any given time.
• In UPI Lite, users can add a maximum of Rs 2000 twice a day.
• There is no limit on the number of transactions, but the cumulative transaction limit in a day is Rs.4000.
• All UPI Lite transactions are reflected in payment app not in users account statement that helps user to keep their account statements clean.
• User will get SMS for the transactions made through UPI Lite.
• User can transfer their UPI Lite balance back to their bank account at any time without any additional charges.
• The chance of payment fails are extremely low on UPI Lite because these transactions are processed by payment apps so, even during peak load on UPI and bank infrastructure these transactions never get failed.

How does UPI LITE work?

UPI Lite works similarly to how a payment app’s wallet operates. First activate UPI Lite on supported app and add money (up to Rs. 2000) to UPI Lite. Now using UPI Lite, you can make payments below Rs.200 without entering UPI PIN. this can be done by scanning any QR code or input mobile number & bank details. UPI Lite requires an internet connection only to add funds to its wallet, it does not require an internet connection to make payments. Users can send their UPI Lite balance back to their bank account without paying any additional charges at any time.

When a user makes a payment through UPI Lite, the funds will not be directly deducted from the user’s bank account. Instead, the deduction will occur from the on-device wallet. UPI wallet feature designed to specifically handle transactions below Rs. 200 without burdening the UPI infrastructure So, even during peak load on UPI, UPI Lite will work seamlessly without any failures.

Why is UPI Lite launched?

According to NPCI, India process around one billion UPI transaction every day, mostly for the groceries and other daily transactions. About 75% of the total volume of retail transactions are having transaction value below Rs.100, and 50% of the total UPI transactions are having a transaction value of up to Rs. 200. These high volume and small value transaction are putting strain on the NPCI and banking infrastructure and to process these billions of transactions seamlessly banks have to upgrade their Infrastructure which require huge investment.

To reduce the strain from UPI infrastructure and banks NPCI design simplified version of UPI-UPI Lite. This On Device Wallet is specifically designed to cater the transactions with the amount of Rs. 200 or below without putting a strain on UPI infrastructure. Which resulting in seamless and faster transaction even during peak UPI loads and optimize UPI resources used for carrying out high value transactions.

UPI allows only 20 transactions in a day but UPI Lite enable users to make unlimited transactions of value up to Rs. 200 but total transaction value in a day is up to Rs. 4000. As user make transactions using UPI Lite so, their transaction history will appear only in payment app and doesn’t get reflected in their bank passbook, resulting simplified the transaction records.

Imagine a situation where you have to make a payment by scanning any QR code and you don’t have internet connection. in this situation you cannot use UPI and other payment app but UPI Lite enable users to make payments by scanning QR code even without internet connection.

UPI Lite supported banks

UPI Lite is currently supported by only 16 banks in India, and the list will expand in future. Here is the list of UPI Lite support banks-

• AU Small Finance Bank
• Axis Bank
• Canara Bank
• Central Bank of India
• Federal Bank
• HDFC Bank
• ICICI Bank
• Indian Bank
• Kotak Mahindra Bank
• Paytm Payments Bank
• Punjab and Sind Bank
• Punjab National Bank
• State Bank of India
• UCO Bank
• Union Bank of India
• Utkarsh Small Finance Bank

UPI Lite supported apps

Right now, only 4 payment apps support UPI Lite on their platform. Here is the list of UPI Lite supported apps-

• BHIM
• Paytm
• Phonepe
• Google pay.

What is UPI Lite benefits?

Here are some significant advantages of UPI Lite-

• Payment without UPI PIN- User does not have to enter PIN for every transaction. However, it is advisable to enable a passcode or biometric authentication for your payment app.
• Offline payment- UPI Lite enable users to make payments in situations with limited or no internet connectivity.
• No Cap on Number of Transactions- With UPI Lite users can make unlimited small-value transaction within the daily uses limit (Rs. 4000/day).
• Payment never fails- Even during peak UPI load, transactions made through UPI Lite don’t fail because small-value transactions are processed by users’ payment apps. Therefore, the chances of payment failure are extremely low.
• Less Clutter on Bank Passbook- Transactions made through UPI Lite are visible only in payment app and does not appear in bank passbook which helps in simplifying the transaction records.
• Minimize load from UPI and banks- As no communication is required with banks and UPI pin, UPI Lite minimize the strain from UPI and banks and their resources can be used to process high-value transactions.

What are the limitations of UPI Lite?

Although UPI Lite comes with several benefits, it also has a set of limitations. Let’s explore these limitations below-

• Per Transaction Limit- UPI Lite per transaction limit is Rs.200 or below.
• Total wallet limit- Total wallet limit of UPI Lite is only up to Rs. 2000.
• Daily uses limit- Cumulative uses limit on UPI Lite is Rs.4000 per day.

What is the difference between UPI and UPI Lite?

Particulars	UPI	UPI Lite
Product	This is a 24X7 payment system for fund transfer between 2 bank accounts in real time.	This is a On Device wallet, for instant funds transfer from sender’s UPI Lite account to the receiver’s bank account in real time.
UPI PIN	UPI PIN required for every transaction.	No PIN required for sending money.
Offline payment	Users can make offline payments using USSD code but can’t send by scanning QR code.	UPI Lite enable users to make offline payment even QR-code scanning.
Number of Transaction per day	Only 20 transactions allowed per day.	No cap on number of transactions.
Transaction limit	Up to Rs. 2 lakhs/day through single or multiple transaction.	Up to Rs. 4000/day but single transaction limit is Rs.200.
Fund transfer	Funds transferred and received via bank accounts with UPI.	Currently, with UPI Lite only you can send money but receive funds directly go to users linked bank account, not in UPI Lite wallet.
Transaction Speed and Reliability	Payment is instant but sometime takes time and even fail.	Payment is quick and never fails.
Transaction History	Available in bank statement and payment app.	Appear only in payment app.
Supported banks	Supported by 300+ major banks.	Supported by 16 banks.
Supported payment apps	All major payment apps.	Currently available in BHIM, Paytm, Phonepe, and Google pay.

How to Set up and Use UPI Lite?

To set up UPI Lite:

1. Download and install a supported UPI payment app on your smartphone.
2. Now, open the app and then select the UPI Lite option.
3. Then select your bank account that support UPI Lite to add balance.
4. Enter the amount (Rs. 2000 or below) you want to add to UPI Lite balance.
5. Enter your UPI PIN.
6. After adding balance to UPI Lite now, you can make payment by scan any QR code or enter a phone number of Rs 200 or below without entering your UPI PIN.

FAQs