UPI Vs UPI Lite Features: The Unified Payments Interface (UPI), is an instant payment system developed and managed by the National Payments Corporation of India (NPCI) – an RBI-regulated entity. UPI is now a prominent form of payment within our daily transactions in India. The use of a smartphone application, security systems, and quick transactions are some of the reasons for the rapid proliferation of UPIs.
To cater to the above requirement and the fast growth of digital payments both in the urban and rural areas, NPCI under the guidance of the Reserve Bank of India (RBI) rolled out UPI Lite in September 2022, an enhanced version of UPI, which allows several low volume transactions to be performed without entering a UPI pin.
Both these payment solutions are innovative in their own rights and achieve comparable objectives, yet they cater to different transaction requirements. In this article, we compare this new functionality with the original UPI system and explore its features, differences, and limitations.
Understanding UPI and UPI Lite
UPI, as we know it, is an instant online payment option functional in India and internationally, in countries like Singapore, the UK, Mauritius, Malaysia, UAE, France, Nepal, and Sri Lanka, among others. Anyone with a smartphone, a stable internet connection, and an active bank account can transfer money in real time from one bank account to the other.
It doesn’t matter who provides the UPI service, QR code, a mobile number linked to the UPI account, or virtual ID, users can send and receive money in a blink of an eye. In fact, the platform lets users initiate and complete multiple transactions from a single mobile application, eliminating the need to access multiple banking applications.
Top Three Features of UPI
High Transaction Limits: The normal UPI transaction has a transaction limit of 1 lakh rupees per day with the only exceptions being education services, hospitals, tax payments, and investments, where it is 5 Lakhs per day making it ideal for significant financial transactions such as Paying utility bills, online shopping and peer to peer transfer.
Versatility: UPI’s system has a transactional strength where one-time payments, Repetitive payments to merchants or even payments in the form of QR codes are possible.
Security: UPI uses two-step authentication including the verification of the mobile number and the UPI PIN making the transactions secure.
UPI Lite, on the other hand, is a simpler and new product on UPI rails, meant to process low-value transactions. Designed as an ‘on-device wallet’, the UPI Lite feature is accessible on the BHIM app and TPAPs. Currently, UPI Lite facility is only available to account holders of specific authorized banks and financial institutions in India.
Top Three Features of UPI Lite
Simplified Process: Users can conduct transactions under ₹1000 on UPI Lite without entering a UPI PIN. Additionally, users can maintain a balance of up to ₹5000 in their UPI Lite wallet, which allows them to expedite small-value payments, like groceries or utility bills.
Reduced Banking Load: UPI Lite’s offline capability processes low-value transactions without an internet connection, reducing the strain on the UPI infrastructure during periods of high demand.
Automatic Top-Up: The auto top-up feature lets users establish a balance threshold for their UPI Lite account. To enable uninterrupted services, the account is automatically reloaded when the balance falls below this limit.
Everything You Need to Know About UPI Lite Auto Top-Up Feature
With the new auto top-up option on UPI Lite, users can have their wallet automatically reloaded when it falls below a specified threshold. To leverage this function, users can set a specific limit on their UPI account.
This feature ensures a pre-defined amount is transferred from the user’s bank account to the UPI Lite wallet, removing the inconvenience of continuous balance monitoring and the need for manual top-ups, thus enabling seamless payment experiences.
How Are UPI and UPI Lite Different?
The core difference between the two payment options is the ease of transaction and the amount of money users are permitted to transfer. Although UPI supports higher-value transactions, UPI Lite is specifically used for low-value transactions. At the same time, UPI needs a PIN while UPI Lite functions without a UPI PIN. On the security front, both payment options come with robust measures.
UPI is a comprehensive payment system supporting all transaction types and values, embedded with robust security measures for every transaction.
UPI Lite is simply an extension of UPI and is created for smaller transactions with a singular focus on creating seamless UX. Not only that but also it efficiently handles a large number of low-cost transactions thus reducing the transaction time and server pressure on the banking system.
What Makes UPI Lite Stand Out from UPI?
The difference between a UPI payment and a UPI Lite payment is primarily the speed and simplicity of the transaction. UPI Lite reduces transaction execution time by opting out of standard customer identification procedures, such as PIN and OTP.
Adding further, its 24×7 accessibility and adaptability to function in places with weak and unstable internet with user-friendly interface, makes it a good choice for a broader variety of users.
UPI Vs. UPI Lite – What Should You Choose?
“Both UPI and UPI Lite are excellent payment tools and fairly user-friendly, feature-rich, and secure. As for which payment method to choose, it entirely depends on users’ individual needs and preferences for convenience, security, and banking functionalities. The availability or the lack, thereof, of internet connectivity should be considered while initiating a fund transfer on UPI or UPI Lite. The value of your transaction is also a factor that will determine your choice of payment platform among the two,” said Mohan K, Founder of TechFini.
Challenges Associated with UPI and UPI Lite Adoption
Although UPI and UPI Lite offer their users several benefits, there are some limitations that users may encounter while using these payment methods. One key challenge is digital literacy as many users, especially from rural areas, are not tech-savvy and might not adopt these payment options.
Security Concerns also persist, despite the strong security measures of UPI and UPI Lite, risks like phishing and unauthorized transactions still exist. Users should keep a time-to-time track of their UPI accounts and be cautious of their security practices. Additionally, UPI relies on Internet access, and users staying in unstable or low connectivity areas might feel the challenge of using the payment method.
Lastly, although UPI Lite is apt for low-value payments, its transaction cap limits its usability for larger payments and restricts its scope to micropayments.
