UPI Lite, for which NPCI has launched an auto top-up facility, is set to launch on November 1, 2024. This enhancement targets to directly manage UPI Lite balances to provide more convenient services to the payment system. The feature lets the users have a set amount below, which they do not have to fund the UPI Lite wallet manually. This update has arrived simultaneously with a rising transaction limit by RBI, which will enhance the usability of UPI Lite for small transactions.
In the new regime users can set an auto top up instruction through their UPI app and authorize deductions from the linked bank account to their UPI Lite current balance. This feature helps users to make fast and safe purchases without entering a pin code for purchases of up to Rs 500. To ensure user control and security, the auto top-up facility is defined as five transactions per day; the mandate can be canceled at any time.
Last month, the RBI issued a new update regarding increasing the limit on UPI Lite, which has further strengthened the system. The immediate transaction limit in UPI Lite will also go up from the current Rs 500 to Rs 1000, and the overall balance permissible in a UPI Lite, which is a mini wallet, will be raised from Rs 2,000 to Rs 5,000. The daily RSN will, however, continue to be set at 4, 000 to ensure that adequate levels of financial prudence and customer convenience are preserved.
These have come after UPI registered a record exploit in October of 2024. The system performed 16.58 billion transactions, which equals Rs 23.5 trillion, which was the record since its launch in April 2016. This new high is an improvement from the earlier high of 15.04 billion transactions in September 2024 and Rs 20.64 trillion in July to show that more and more consumers are trusting the UPI as a means of payment.
The increase in UPI transactions has been primarily in the person-to-merchant category of transactions and has slightly spiked during the festival season of October. This growth trend is apparent in the daily transactions, where the number of duly executed transactions crossed 535 million with a total worth of Rs 75,801 crore in October as opposed to 501 million transactions worth Rs 68,800 crore in September. Compared to the previous year, in October, there was an enviable uptake in transaction volume by 45% year-on-year, while the transaction value rose by 37% year-on-year.
With the advancement of technological facilities, bringing the auto top-up for UPI Lite is another great innovation that shall help to improve clientele satisfaction in digital transactions through UPI. This feature would significantly increase UPI Lite users, enabling them to make small transactions using the app due to ease in maintaining the required balance for such transactions, and would further fuel the usage of digital transactions in India.
More importantly, the experience of UPI and the continuous development of its environment suggests that India’s financial sector conversion to digital is determined and ongoing. The COVID-19 world has seen a rising demand for consumers and businesses using digital payment solutions, and therefore, UPI has a very definitive position as a key process in the Indian economy. Such uninterrupted innovation and user-friendliness of subsequent developments exhibit the potential of regulatory bodies and financial institutions to augment the digital payment ecosystem.
