PhonePe Follows Paytm, Launches UPI Lite For Low-Value Payments

Fintech major PhonePe on Wednesday (May 3) said it has launched Unified Payments Interface (UPI) Lite feature on its app which would allow users to initiate low-value payments under INR 200 from their UPI Lite account without entering a pin. 

PhonePe’s rival Paytm launched the UPI Lite feature in February. Earlier this year, there were reports that both Paytm and PhonePe were set to soon launch the offering. 

As per the National Payments Corporation of India (NPCI), UPI Lite wallet balance is only a virtual ‘on-device’ balance and a reflection of UPI Lite balance allocated by the users in their respective accounts. On loading the UPI Lite virtual wallet, the UPI app will, by default, use UPI Lite balance for making transactions amounting to up to INR 200, eliminating the peer-to-peer (P2P) transactions requests. 

Using the UPI Lite feature, PhonePe users can now load up to INR 2,000 in their account and make transactions of up to INR 200 or less at a time. They will be able to instantly activate the feature on their PhonePe app through a process that doesn’t involve any KYC authentication to create a UPI Lite account, the startup said in a statement. 

Users will receive a daily SMS with the history of their UPI Lite transactions from their bank. PhonePe said that this would help in decluttering bank statements/passbooks with small-value transactions, as the transactions would only be visible in the Lite account and not in the bank statement.

PhonePe UPI Lite is supported by all major banks and is accepted at all UPI merchants and QRs across the country. 

“UPI Lite is a core part of the UPI stack offering, with a vision to enhance the users’ digital payments experience for frequent and low-ticket size spends. Small-ticket transactions make up a significant volume of the overall UPI payments, and UPI Lite will make them quicker and convenient, without putting a strain on the existing UPI infrastructure,” said Rahul Chari, cofounder and CTO at PhonePe. 

“UPI Lite also paves the way to introduce use cases that need payment execution without network connectivity, making it one of the most exciting launches from the NPCI (National Payments Corporation of India) in recent times,” he added.

Earlier this year, after raising $200 Mn in primary capital from Walmart as part of its ongoing $1 Bn fundraise, PhonePe said it would use the funds to scale new businesses and also integrate new UPI features such as UPI Lite and Credit on UPI.

In another step towards boosting the UPI ecosystem, which has grown leaps and bounds since its launch, the Reserve Bank of India (RBI) launched UPI Lite in September last year. UPI processed a record 868.5 Cr transactions worth INR 14.1 Lakh Cr in March, with PhonePe, Google Pay, and Paytm continuing to lead the race.

Interestingly, within a month of UPI Lite launch, Paytm said 4.3 Mn customers used the new feature and it recorded over 10 Mn transactions.