What is UPI Lite
The Reserve Bank of India (RBI) had launched the UPI Lite functionality in September 2022 during its Monetary Policy Meet (MPC). “The solution runs off existing UPI ecosystem protocols for mobile phones to ensure commonality, compliance and system acceptance. UPI LITE experience is intended to be a customer-friendly approach to enabling low value transactions without utilizing a Remitter bank’s core banking systems (CBS) in real-time, while providing adequate risk mitigation,” stated the press release by Federal Bank.The main intention behind launching UPI Lite was to alleviate the stress on CBS occurring due to the sheer volume of UPI transactions.
How Federal Bank customers can use UPI Lite
According to the Federal Bank press release regarding the launch, customers can enable the UPI Lite feature on their existing UPI app that supports the Lite functionality. “The process involves logging in, accepting terms and conditions, specifying the amount, selecting the linked bank account, and confirming the request with their UPI PIN,” stated the Federal Bank press release. A UPI Lite account can be created within the existing UPI app without downloading a new app, the press release added.Benefits of UPI Lite for users include reduction in transaction time, a ready-to-access bank statement, higher payment success rate and enhanced security. However, there is a transaction limit for how much money can be stored and used in a day from the on-device UPI Lite wallet.UPI Lite transaction limits
As per the Federal Bank press release, these are the transaction limits for UPI Lite:
- Per transaction limit: up to Rs 500
- Maximum Cumulative usage per day: Rs 4,000
- Maximum balance in UPI Lite account at any point of time: Rs 2,000
For example, an individual can buy an item with maximum Rs 500 through UPI Lite payment. This can be done by loading the on-device UPI Lite wallet with Rs 2000. But the maximum monetary limit per day is Rs 4,000 so a maximum of Rs 500 transaction can be done for 8 times a day (Rs 500*8= Rs 4,000) by loading the on-device UPI Lite wallet with Rs 2000 for 2 times.