SUMMARY
NPCI aims to deploy the three new financial products to onboard the next 300 Mn users on digital payments
UPI LITE will allow users to make small-value transactions up to INR 200 in a ‘near-offline mode’
Eight banks partner with NPCI for UPI LITE including SBI, HDFC Bank, PNB, among others.
The Reserve Bank of India (RBI) Governor Shaktikanta Das announced three key digital payment initiatives on the sidelines of Global Fintech Fest 2022 on Tuesday (September 20).
Among the products launched were RuPay credit card on the unified payments interface (UPI) network, low-value transaction focused solution UPI LITE, and Bharat BillPay Cross-Border Bill Payments.
“In collaboration with the stakeholders, three exciting new products are being launched…Two of these pertain to enhancing the feature set of UPI by facilitating small value transactions through UPI LITE and linking credit cards to UPI. The third initiative is the enablement of cross-border inward bill payments using Bharat Bill Payment System (BBPS),” said RBI Governor.
The services were launched in the presence of NPCI chairman Biswamohan Mahapatra, Infosys chairman and NPCI advisor Nandan Nilekani, among others.
In a press statement, NPCI said that the three initiatives together have the potential to ‘revolutionise the digital payments ecosystem, extend the reach of digital payments and aid the journey of onboarding the next 300 Mn users on digital payments.’
Different Products, Different Audience
With the announcement, authorities will now allow the linkage of RuPay credit cards with UPI. Until now, only debit cards were allowed to be linked with the UPI.
Initially, the product will be launched only for customers of Punjab National Bank, Union Bank of India, and Indian Bank. The initial phase will be centred on extracting ‘actionable learnings’ from the operations. Subsequently, the project will be scaled up to include other banks and to increase usage.
The NPCI claims that the RuPay credit card will be linked to a virtual payment address, which in this case would be the UPI ID, and would mask the user’s real identity to enable safe, and secure payment transactions.
The RBI Governor also launched the UPI LITE service that will largely be focused on low-value transactions. With UPI LITE enabled on their BHIM apps, users can make small-value transactions up to INR 200 in a ‘near-offline mode.’
“UPI Lite will reduce the debit load on the core banking system, thereby improving the success rate of transactions further, enhancing the user experience, and taking us one step closer to processing a billion transactions a day on the UPI platform,” said the NPCI.
In addition, the total limit for UPI Lite balance on a digital wallet has been capped at INR 2,000. Currently, the service is live across eight banks, namely Canara Bank, HDFC Bank, Indian Bank, Kotak Mahindra Bank, Punjab National Bank, State Bank of India, Union Bank of India and Utkarsh Small Finance Bank.
The rationale behind the INR 200 threshold could likely be attributed to the fact that a majority of transactions processed on the UPI are low-value. Currently, around 50% of UPI transactions processed on the UPI network are below INR 200.
During the event, the RBI Governor also unveiled the ambitious Bharat BillPay Cross-Border Bill Payments system. Largely targeted at non-resident Indians (NRIs) and Indians living abroad, the product allows users to pay utility, water, and telephone-related bills on behalf of their families in India.
Federal Bank has tied up with UAE’s Lulu Exchange to offer the service and is the first company to go live with the Bharat BillPay Cross-Border Bill Payments.
The move will likely bring in more remittances and plug gaps in terms of services for Indians paying utility bills from outside the country.
It is pertinent to note that the RBI had announced the cross-border inbound payments system last week. So far, more than 20,000 billers have been onboarded on the system which processes more than 8 Cr transactions monthly.
Spurring Digital Payments
Earlier in June this year, the RBI released its ‘Payments Vision 2025’ that has targeted strengthening the digital payments ecosystem in the country. As part of the move, RBI and other government agencies have announced a slew of initiatives to boost the space.
The central bank unveiled its UPI123Pay feature in March that allows feature phone users, without any internet, to make UPI transactions. Besides that, the central bank has also announced a slew of initiatives such as tokenization, the creation of regulatory sandbox and opening access of centralised payment systems (CPS) to non-bank payment systems operators (PSOs).
As if that was not enough, RBI has also backed efforts for internationalisation of domestic payment systems as well as to devise a framework for regulating payment aggregators (PAs) and a framework for outsourcing of payment and settlement-related activities by PSOs, among others.
The efforts have borne fruit. In June, NCPI International signed a memorandum of understanding with France’s Lyra Network for acceptance of UPI and RuPay Cards in the European nation.
UPI continues to be a trailblazer innovation. It recorded 657 Cr transactions last month, processing a transaction volume of INR 10.72 Lakh Cr during the same period.
