March 16, 2022
To,
All UPI Member Banks
Dear Sir/Madam,
UPI has become one of the most preferred digital payment mode for Indian citizens because of ease and convenience, superior user experience, security and interoperability. To realize the vision of billion-a-day payments within the next 3 to 5 years, NPCI has been aggressively innovating and adding new features in UPI from time to time to expand its usage.
Various studies on payment systems have observed that about 75% of the total volume of retail transactions (including cash) in India are below ₹100 transaction value. Further, 50% of the total UPI transactions are having a transaction value of up to ₹200/-. To process billion-a-day transactions, entire UPI ecosystem will have to invest heavily in infrastructure upgrade. Large banks have already implemented upgrades, such as separate financial and meta transactions infrastructure, separate endpoints for payment service provider (PSP) / issuer and to provide better technical up time for UPI services, and such banks are getting ready to process three times of current volumes.
As an efficient strategy to process large-scale small value digital payments and based on the guidelines issued by RBI for enabling mobile devices to support offline payments vide its circular no. CO.DPSS.POLC.No. S1264/ 02-14-003/2021-2022 titled “Framework for facilitating small value digital payments in offline mode” dated 3 rd January 2022, NPCI has designed the “UPI Lite – On-Device wallet” (“UPI Lite”) functionality for UPI user (User). In phase 1, UPI Lite will process transactions in near offline mode i.e. debit offline and credit online, and at a later point, UPI Lite will process transactions in complete offline mode i.e. debit and credit both offline.
A User of UPI App will have the option to enable UPI Lite i.e. “On-Device wallet” on her/his UPI App. Once enabled, the User can allocate funds from her/his bank account to UPI Lite. Such funds shall reside with the User’s bank in an escrow / pool / designated account and such balance shall reside on-device on the common library (CL) of the User’s UPI App.
At present, only debit from UPI Lite balance shall be permitted and all credits to UPI Lite (including refunds, etc.) will be processed online in the User’s bank account maintained in the bank’s core banking system. The upper limit of an UPI Lite payment transaction shall be ₹200/-.The total limit of UPI Lite balance for an “On-device wallet” shall be ₹2,000/- at any point of time. Replenishment of funds in UPI Lite shall only be allowed in online mode with additional factor authentication (AFA) or using UPI AutoPay which has been registered by the User in online mode with AFA.
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