Reserve Bank of India to introduce UPI based payment solutions

With an aim to promote wider digitisation, Reserve Bank of India (RBI) on Wednesday announced that UPI-based digital payment solutions will be launched on feature phones.

Only smartphone users have been availing Unified Payments Interface (UPI) services for payments so far. India has over 118 crore mobile users, and of which only 74 crore have smartphones. This UPI service for feature phone users will benefit consumers in large numbers.

Also, the central bank has proposed to launch an ‘On-device’ wallet in UPI app that will offer a simple process flow by enabling small value transactions. It is found that 50 per cent transactions through UPI were below Rs 200. Since low value transactions utilise significant system capacity, it leads to customer inconvenience due to transaction failures because of connectivity issues.

This ‘On-Device’ wallet will conserve banks’ system resources without any change in the transaction experience for the user.

Also, to further encourage the use of UPI by retail investors, RBI also proposed to enhance the transaction limit for payments through UPI for Retail Direct Scheme and IPO applications from Rs 2 lakh to Rs 5 lakh.

Since its availability from January 1 2019, UPI has also become a popular payment option for Initial Public Offerings (IPOs). The transaction limit in the UPI system was enhanced from Rs1 lakh to Rs 2 lakh in March 2020.