During the Monetary Policy Committee (MPC) meeting, RBI Governor Shaktikanta Das unveiled a range of fresh features for UPI. Here’s a rundown of what you should be aware of.
India’s popular digital payment method, UPI, is receiving a significant enhancement with the introduction of several novel features. The spotlight is on Conversational Payments, an innovative method that allows payments through interactions with AI-powered systems.
And that’s not all. During the Monetary Policy Committee (MPC) meeting on Thursday, RBI Governor Shaktikanta Das unveiled additional new features for UPI. Here’s a brief overview.
AI-Powered Conversational Payments
NPCI aims to leverage advanced technology to elevate digital payments by introducing “Conversational Payments” on UPI. This innovative feature allows users to securely engage in conversations with AI-powered systems to facilitate payments.
Accessible on both smartphones and feature phones, this functionality is set to bolster digital adoption across the nation, according to Das. Initially, it will be offered in Hindi and English, with plans to expand to other Indian languages. The RBI is expected to provide guidance to NPCI soon.
Although precise mechanisms for conversational payments weren’t disclosed, it’s probable that NPCI might integrate an AI chatbot, akin to ChatGPT, to assist users with payment processes.
Enhanced UPI Transaction Limit
The RBI has put forth a proposition to raise the transaction limit for UPI Lite in offline mode from Rs 200 to Rs 500. Presently, the limit stands at Rs 200 per transaction and Rs 2,000 per payment instrument for offline small-value digital payments, encompassing both National Common Mobility Card (NCMC) and UPI Lite.
This mechanism, devoid of the need for two-factor authentication, facilitates swifter, more dependable, and touchless payments for minor-value transactions and transit-related payments.
“There have been calls for elevating these limits. In order to promote broader acceptance of this payment method and expand its applications, the proposal is to augment the per transaction limit to Rs 500,” Das explained.
Yet, to mitigate the potential risks tied to loosening two-factor authentication, the total limit will remain at Rs 2,000. He further stated that the RBI will provide forthcoming instructions on this matter.
NFC-Enabled Offline UPI Payments
Additionally, Das revealed the introduction of offline UPI payments through near-field communication (NFC) technology using UPI Lite. This advancement simplifies payments, requiring users to just tap their smartphone on the point-of-sale (PoS) machine for transactions.
“For the purpose of encouraging UPI-Lite adoption, the intention is to facilitate offline transactions through the application of NFC technology. This enhancement will not only facilitate digital retail payments in scenarios where internet or telecom connectivity is limited or unavailable but will also ensure prompt transactions, with minimal instances of transaction decline,” stated the MPC announcement.
Public Reception
NPCI’s latest advancements are perceived as a catalyst for digitization in remote and rural regions, simultaneously enhancing access to seamless payment systems.
“The move by NPCI to encourage broader acceptance in rural and distant areas is commendable. Although specific details are somewhat obscure, the Conversational AI tool seems designed to overcome language barriers, offering real-time assistance in local languages to guide users through UPI payments. Notably, the introduction of offline payment modes (along with increased limits) acknowledges the limited internet and infrastructure access in rural settings, aligning with the current need to facilitate payment digitization. As limits rise, ensuring the security and legitimacy of these transactions becomes paramount to prevent misuse,” remarked Shreya Suri, Partner at INDUSLAW.
These innovations are also anticipated to democratize financial services and payment solutions across the nation.
Sanjay Khan Nagra, Partner at Khaitan & Co., remarked, “RBI’s unveiling of fresh UPI attributes, like conversational-based payments, represents a significant stride in enhancing the accessibility of digital payments in India. The inclusion of NFC-based payments, offering a ‘tap and pay’ alternative for UPI users, is an eagerly anticipated development. This advancement holds the potential to democratize financial services and payment solutions across the country, a truly encouraging development.”
