Indias central bank announces upi lite to make transactions below 2 50 faster and simpler on the countrys most popular digital payments network manish singh techcrunch
UPI supercharged mobile payments in India. It’s now gearing up for next phase of growth. | india india upisinghtechcrunch
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UPI has been the most popular method for Indians to transact online in just six years. In the second largest internet market in the world, 6.57 billion transactions were made using UPI’s mobile electronic payments system last month. It is now taking steps to accelerate its growth.
India’s attempt at overcoming card companies in an open marketplace, bringing hundreds of millions into digital payments, and curbing corruption, was the creation of the payments network.
Shaktikanta Das (the governor of India’s central banks) said Tuesday that UPI usage increased by 427% between March 2020-August 2022.
He said that the central bank is working to extend UPI to “several countries in Asia, the Middle East, and other parts” and has set up an international subsidiary.
“UPI has emerged to be the pride of the country… It’s one place where India can play an important leadership role in world affairs in the days ahead.” He said that while it is a remarkable product, we must be very careful about its infrastructure as it scales.”
Two new UPI offerings, one that expands the usercase and the other that helps it scale further, were announced Tuesday by Das.
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UPI Lite is a lighter version, which he said, has been made available in eight banks, including HDFC and SBI. UPI Lite was originally proposed in January and processes payments below 200 Indian Rupees ($2.5). It is aimed to reduce the burden on infrastructure banks, executives stated at a Tuesday conference.
Despite its rapid growth, UPI still faces some difficulties with its success rate. UPI Lite works in near-offline mode, and seems to treat settlement differently than its mature counterpart. An FAQ states that UPI Lite Transactions will be sent to you once per day via SMS from your Issuing Bank. This SMS will contain a history of transactions performed during the day.
UPI Lite allows you to create a virtual wallet on your device that can hold as much as $25. UPI transactions have a minimum value of $2.5 and approximately 50% are worth less than $25. UPI Lite will offer users a simple solution to faster, simpler and lower-value transactions,” stated the National Payments Corporation of India (a special unit of India’s central bank that supervises UPI).
The central bank is also moving forward with its plan to connect UPI to credit card.
According to Das, Indian Bank will be first to issue Rupay Credit Cards that link to UPI. The central bank will add UPI support to credit cards to increase the number of people who can use them and improve their credit ratings.
Analysts at Goldman Sachs said that the move could increase credit card penetration in India and increase the availability of digital payments. This would have a positive impact on both card companies (such SBI Cards) as well as fintech platforms (such Paytm).
